Critical Perspectives on Accounting 24 (2013) 459–468

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Critical Perspectives on Accounting

journal homepage: www.elsevier.com/locate/cpa

Back to basics: What do we mean by environmental (and

social) accounting and what is it for?—A reaction to Thornton§
Rob Gray
School of Management University of St Andrews, St Andrews, Fife KY169RJ, Scotland, United Kingdom

A R T I C L E I N F O A B S T R A C T

Article history: This paper seeks to explore whether mainstream financial accounting when it appears to
Received 11 January 2013 genuflect to the ‘environment’ actually has anything substantive do with – or to say about
Received in revised form 8 April 2013 – the natural world. It seems important to remember that conventional financial
Accepted 24 April 2013
accounting is a predominantly economic – and not very internally logical – practice which
Available online 27 May 2013
has no substantive conceptual space for environmental or social matters per se. It has no
space for what Thielemann calls ‘market alien values’ – values such as environmental
Mots clés:
concern. The paper re-examines why we might account at all and revisits why accounts
Environnemental
Intérêt public which explicitly recognise environmental (and social) issues can be potentially very
Social important indeed. What seems clear is that whilst any account that sought to reflect
Développement durable environmental and social exigencies might choose to use the technologies of accounting –
notably debits and credits – there is no essential reason why they must do so. If we wish to
Palabras clave: account for an environment, we almost certainly would not start with the somewhat
Ambiental
bizarre and tortured foundations of conventional financial accounting.
Interés Público
ß 2013 Elsevier Ltd. All rights reserved.
Social
Sostenibilidad

Keywords:
Environmental
Public Interest
Social
Sustainability

1. Introduction

There were then. . .. and there are now people who think that they know what accounting. . .. . . is. How wrong these
people are.
(Hopwood, 2007, p. 1367)

It is probably safe to start with a few statements of the obvious. We are all probably familiar with an accounting –
that accounting which is based on the elegant and undoubtedly useful system of double-entry bookkeeping from
which various streams of cost and management accounting develop and, in altogether more arcane ways, the craft of
constructing financial statements emerges. And that basic accounting with which we are all so familiar is

§
I am pleased to acknowledge the comments, suggestions and reactions of Craig Deegan, Dan Thornton and Dean Neu on an earlier version of this paper.
It remains entirely my own inadequacy that I failed (and continue to fail) to read Dan Thornton’s paper correctly, that I completely missed the point of the
argument and that I missed the amusing allusions and references suggested in the paper.
E-mail address: rhg1@st-andrews.ac.uk.

1045-2354/$ – see front matter ß 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.cpa.2013.04.005
460 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468

fundamentally based, as Dan Thornton’s paper correctly notes, on the maintenance of definite entity boundaries
and the identification and recording of priced transactions crossing those boundaries.1 Indeed, the basic double
entry bookkeeping system is interested only in the cost/price of the transaction and the accounting category to
which it can be allocated. Other characteristics of the transaction are typically ignored. It all gets a lot more
murky once the basic double entry is completed. Despite a rhetorical attachment to the objectivity and cost/
price-driven nature of our conventional accounting, once we pass from a basic trial balance on towards the
composition of financial statements, the precise nature of accountants’ consistency and internal logic becomes
ever harder to discern.
That this accounting is all accounting, the only accounting or even the most desirable accounting is clearly not the case.
The nature of giving and receiving accounts is not set in stone; is not part of a natural law; and, as Hopwood (2007) argues,
has changed throughout history.
Trite though it must be, any accounting is typically judged by a combination of the extent to which it meets the purposes
that are – or could be – held for it, and the extent of the unanticipated (and particularly the malign) consequences of its
application. Whilst much basic accounting might be thought of as primarily intended to support the running of an enterprise
of one sort or another, it is quite apparent that much of the paraphernalia of financial accounting is not designed with that in
mind. When we approach any accounting it behoves us, I should have thought, to remind ourselves why we think this
activity matters. Implicitly, in one way or another, most financial accounting activity seems to be concerned with such
matters as maximising shareholder wealth, helping distant and remote financial markets operate and, perhaps, helping
navigate tensions between directors and the holders of investment capital. Financial accounting, per se, has no obvious
interest in matters environmental.2
Now this probably wouldn’t matter (quite) so much if it were not the case that the natural environment is under the
most appalling attack (UN, 2005; WWF, 2012) and that the very processes that conventional financial accounting seems
designed to encourage are amongst the most likely causes of the environmental desecration, (Johnson, 2012). In these
circumstances, it seems extremely important that any financial accounting which inexorably has the effect of
encouraging growth, profit and efficiency at the inevitable expense of social and environmental damage (externalities as
Dan Thornton has it) at least acknowledges this possibility, (Birkin and Polesie, 2012). Equally, if we are to try and move
towards offering accounts of the natural environment (or moves towards claiming so to do) then it seems a sine qua non
that such accounts must reflect the best available data reflecting the planetary state – ‘planetary accounts’ if you will,
(Porritt, 2005).
It is from this context that this brief set of reactions to Thornton’s (this issue) paper emerges. The following section
offers one reading of ‘‘Green accounting and green eyeshades’’ in an attempt to understand Thornton’s arguments and
to tease out his key points.3 The section is probably unsuccessful in this attempt. Section 3 returns to some very basic
ideas about accounting and the natural environment and offers a range of possible purposes behind such human
activity. As with a lot of previous work in ‘‘environmental’’ (and ‘‘social’’) accounting, this section privileges (versions
of) the natural environment along with the more strictly human notion of accountability. The final section calls for
reflection in accounting (and indeed in environmental and social accounting) about its purposes, its politics and its
possibilities.

2. Thornton’s case?

It is initially difficult to understand the parameters of Thornton’s argument because the absence of references in
the paper made it almost impossible for this reader to know how this absence mighty be construed. The most
immediately obvious interpretations might include that he has some genuine objections to the plethora of early
attempts at ‘‘green accounting’’ or that he is simply unaware of the extensive work in the field. This is especially
awkward because there is a substantial literature which explores various approaches to (what we might refer to as)
environmental accounting and which, to varying degrees meets what I take to be Dan Thornton’s apparent criteria
that accounting must comprise debits and credits and reflect some sorts of accounting processes4. This literature (see
especially Rubenstein, 1989, 1991, 1992, 1994; but also Dierkes and Preston, 1977; Ullmann, 1976; Bebbington, 2007;
Bebbington and Gray, 2001; Epstein, 2008; Herbohn, 2005; Jones, 2003; Lamberton, 2000; Schaltegger, 1998;
Schaltegger et al., 2006; Schaltegger and Burritt, 2000, 2005; Schaltegger and Wagner, 2006a, 2006b) is even engaged,
to varying degrees, with income statements and balance sheets. This is a long-standing and diverse literature so its
absence is therefore puzzling – and quite possibly leads to a more critical reading than would perhaps be apposite.

1
It is worth emphasising that Thornton’s arguments are predominantly concerned with financial accounting although whether this perhaps narrows our
focus is a moot point.
2
And the long-standing drift from what might once have been thought of as stewardship to a several decade dominance of the bizarre claims of decision
usefulness as a conceptual framework simply emphasises this. (See, for example, Gerboth, 1987; Hines, 1991; Ijiri, 1983; Macve, 1981; Laughlin and Puxty,
1981).
3
Other papers in this issue, provide other readings and reactions (Cho and Patten, 2013; Deegan, 2013; Spence et al., 2013).
4
Four statements on the first page of the paper lead me to this inference.
 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468 461

The case that Dan Thornton presents (whether on his own behalf or in a subtly ironic sense is unclear) is actually a purely
economic, purely profit-seeking discussion, which adopts (predominantly at least) a profit-seeking enterprise’s point of
view.5 It may be, in fact, that we should read Thornton’s arguments as being principally concerned with current mainstream
(US) practice and the potential such practice might have if we developed the mechanisms contained in extant accounting
standards concerned with Accounting for Asset Retirement Obligations (AROs). As we shall see, this is only peripherally
related to ‘‘green accounting’’ in any broad sense. And it seems relevant to recognise that this is not new territory: those well-
known ‘critical accountants’ Basil Yamey and David Solomons took these matters apart reasonably thoroughly over 40 years
ago, (Amey, 1969; Solomons, 1974).
‘‘Green accounting and green eyeshades’’, if I follow it correctly, proceeds as follows. The paper opens with a reference to
debits and credits and quickly identifies the purpose of accounting to be one of ‘‘reliably recording market-mediated
transactions’’ and thereby providing ‘‘observable bases for contracts’’.6 Thus ‘‘accounting’’ is immediately synonymous with
current conventional financial accounting and, unfortunately, fails to draw any distinctions between the simple elegance of
bookkeeping and the hocus pocus of accounting decisions – typically mediated by accounting standards – which produces
the remarkable phenomena that are financial statements, (Bebbington et al., 2001a, 2001b).
If the absence of any explicit interaction with prior literature presents a problem when it comes to engaging with Dan
Thornton’s arguments, it seems to me that the range of implicit assumptions in the paper make it more difficult still. There
seem to be so many assumptions: some made explicitly, some presented in the form of unsupported assertions, others
introduced only implicitly; that this reader is left trying to speculate about what framing is actually being used to develop an
argument and what assumptions are being relied upon. How we might embrace and respond to the arguments seems to me
to remain elusive throughout the paper. This is unfortunate as it restricts the possibilities of debate being joined – I certainly
do not want to talk straight past Thornton’s arguments but neither do I wish to expend excessive effort trying to immerse
myself in the intertwining of assumptions (that look, superficially at least, like the musings) of a neo classical economist
manqué (Fig. 1).
Equally, the range of assumptions, it seems to me, leads to a number of contradictions which, in turn, potentially
confuse matters greatly. The potential for confusion might be illustrated briefly. An example of the confusion involves
the assumption that the chief role of accounting is to reliably record ‘‘market-mediated transactions’’. This is followed
almost immediately by the perfectly acceptable statement that prices do not include externalities and that the financial
statements therefore underestimate the costs of remediation (sic).7 These externalities should not concern an
accountant working within the world (that I believe) Thornton is suggesting, as they are not market-mediated
transactions – or at least not yet. An estimate is not (as far as I can see), at the time of the estimate, a market mediated
transaction. To the extent that it might be possible to accept it as such, the importance of ‘‘reliably recording’’ is
undermined by such estimates. Thornton himself identifies this in a number of places – not least that different
approaches to AROs produce different numbers and that his all-seeing accountant (his OCA) has to predict numbers and
factor in more than cents and dollars.
Put simply, whilst a simple financial bookkeeping might provide an attractive and justifiable basis for a historic cost
accounting, any such a basis loses what little internal logic it possesses when it is then required to accommodate the
spasmodic assumptions of a pseudo-welfare economic approach to pricing – however well-intentioned. It is not
apparent to me why we might do such a thing. I struggle to isolate the consistency which might give a point to the
analysis, (and, indeed, this has been stumbling block for me on whole swathes of what passes for financial accounting
theory).
The paper then briefly speculates on the matter of the internalisation of externalities, very appositely recognising the
essential role of the government in ensuring this happens. However the paper then, abruptly and for no apparent reason that
I could discern, introduces two important restrictions: (i) that government intervention can only (should only?) be imagined
through cap and trade schemes and (ii) that what should be traded in such schemes is pollutants. Why government
involvement should be so constrained and why the extent of environmental (and social) concern should be so limited to
pollutants (undefined) is far from obvious. These restrictions are quickly rolled up into a focus upon remediation and other
potential liabilities arising from Asset Retirement Obligations (AROs). Whilst I can, of course, broadly see an intersection
between them, try as I might I cannot see how ‘‘environmental accounting’’ might be synonymous with ARO and how
remediation of an entity’s assets might be synonymous with dealing with pollution. The focus being commended to us,
remains opaque, I fear.
The bulk of the paper then enters a neo-classical economic world. It adopts the frequently very powerful and useful
method of analysing artificially constrained situations in order to explore potentials under restricted circumstances. Less
obviously this analysis is also intended to tease out a possible assessment of a company’s ‘‘obligations to society for
environmental damage’’. I confess to being largely un-persuaded by this approach – although I could see why it might appeal

5
Subsequent conversation has suggested that an alert reader would spot that this paper is intended ironically and as a provocative joke. This was no more
obvious to this reader than the suggestion that all of the papers in the North American mainstream accounting literature concerned with social and
environmental matters might also be seen ironically. Now that would be hilarious.
6
The statements in the paper that ‘‘I saw the chief roles of accounting’’ and ‘‘I still do’’were taken at face value as a personal statement of a belief by the
author. At a minimum they suggest important political attachment.
7
The notion that externalities can be remediated is a profound assumption in itself.
462 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468

1. It is only accounting if it has debits and credits

2. “Green” accounting does not have debits and credits
3. “Green” accounting and social responsibilities are synonymous
4. You can only account for an enterprise’s social responsibilities with debits and credits
5. Only “critical” accountants might be prompted to respond to these comments
6. Chief role of accounting is to reliably record market-mediated transactions
7. Chief role of accounting is to serve as an observable basis for contracts
8. Numbers are only as good as the prices behind them
9. There is such a thing as a perfectly efficient market
10. Environmental issues are understood as non-internalized externalities
11. The world is framed exclusively by economics
12. Social costs can be remediated?
13. All environmental “externalities” can be controlled by a “cap and trade market for pollutants”
14. Cap and trade is the most effective system for controlling pollutants (sic).
15. Emissions trading was a “radical idea in 1993”
16. Not upsetting the apple cart is an attractive outcome
17. “both the firm’s cost of capital and the auditor’s fees are positively related to reliability” is sefl-
evidentially true and requires no qualification.
18. The only people to whom accounting (and the enterprise) owes a duty are the investors
19. Environmental externalities can be understood through risk
20. The statement that “in the absence of reliable disclosures, investors assume the worst…” is an
evidentially supported statement and is relevant to environmental degradation (p2).
21. Remediation of land/assets (and the costs of so doing) is the only issue of concern (pp3 and 5).
22. Remediation is possible.
23. Environmental accountability is restricted to places where a firm commits to reclamation
expenses beyond that are required by law (p3).
24. Discounting and NPV are not controversial, (p3)
25. The reduction analysis typical of neo-classical economics helps us here even with empirically
risible assumptions such as OCAs! (p4)
26. Prices are neutral things – i.e. they are not political and reflect powerful interests (p6)
27. Hayek’s views are uncontroversial
28. A “free economy” can exist
29. There is no space between totalitarian central planning and “a free economy” (p7)
30. Measuring citizen’s equity is possible and/or useful (p8)
31. Law setting is not influenced by accountants and by capital (p9)
32. We do not already know that companies are active in responding to the predictability of legal
changes (p10)
33. The statement “Big oil…. environmental issues” makes some sense (p10)
34. By implications there is no (or little) difference between oil spill and financial meltdown (p10).
35. Financial crisis arose as a result of “a few rogue banks” (p11)
36. Solutions involve science and welfare economics – not ethics, sociology or politics (p11)
37. LIBOR isn’t rigged
38. Democratic views and those of active USA investors are identical (p11)
39. The paraphernalia of profit, growth, capitalism, current forms of business, markets etc.is
incontrovertible.

Fig. 1. A Selection of Thornton’s implicit (and occasionally explicit) assumptions/assertions.

to a mainstream, economically focused accountant. It is of course a truism that the lens one adopts determines both what one
sees and those things one perceives as demanding attention. Environmental and social accounting suggest a recognition of
multiple perspectives and thus multiple accounts. Crudely one might think, therefore of an environmental account as an
articulation of the economic through a lens which privileges nature rather than, as we have here, an articulation of nature
through the lens of the economic. It was not apparent to me what benefit nature and society might gain if we suspend belief
long enough to immerse ourselves in the rhetorical devices of a simple economic analysis.
I am unable to shake the view that whilst economic analysis is no more or less valid per se than any other form, it is the
very ubiquity of an un-mindful economics that seems to swamp accounting practice, policy and academe that leads, in turn
(it seems to me), to a relatively superficial and even trite acceptance of the role that accounting plays in the ecological crisis,
(Maunders and Burritt, 1991; Thornton, 1993; Deegan, 2000, pp. 305–308). Once we try to introduce (what Thielemann
calls) ‘‘market alien values’’ into a market-based economics we need to question why we would do that, why a more human
or nature-centred (i.e. non-economic) analysis would not be at least as appropriate in the first place and how we will counter
 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468 463

economics’ tendency to appropriate and push out all of these ‘‘market alien values’’ (Thielemann, 2000).8 After all, a
commitment to economics would more typically be accompanied by an attachment to a belief that market prices will always
reflect what needs to be reflected and everything else impacts upon personal freedom and (as Hayek would have it) the road
to serfdom.
So, I suppose, if I was trying to expand current mainstream financial accounting to embrace a wider awareness and
responsiveness to (perhaps environmental) risk – principally for the financial participants of large companies – I would want
to start with a clear-eyed view that the only risk to the financial participants is the risk that those financial participants –
especially investors – may somehow be accorded less financial worth from the entity than they might have done. I would
then assess those things that might endanger their unassailable right to wealth beyond measure and explore how my
accounting – on whatever basis I adjudged apposite – might accommodate these putative concerns. I am not at all sure that I
would start with some marginal notion of what an economically- and accounting-restricted environmental accounting
might or might not be.
On the other hand if I wanted to develop an environmental accounting (whatever that means) I would start with an
attempt to understand notions of ‘‘environmental’’ and how, if at all, we might construct accountings of/for it/them.
Whichever I did, I would want to start by carefully asking ‘‘why are we doing this?’’. To what end or purpose are we
seeking accounts of that which is not formally accounted for within conventional mainstream accounting? This is what the
next section attempts.

3. So what is environmental accounting for?

Why accountants might wish to contemplate accounts of the environment is a question that the more perceptive critical
theorists have asked in the past (see, for example Cooper, 1992). However, in the excitement of exploring and constructing a
new environmental accounting in order to (inter alia) make new things visible, open up more interesting possibilities for new
accountings, challenge dominant narratives and develop a new field, the question has rarely been addressed by those
directly involved in the enterprise. In retrospect, we might be both surprised and more than a little abashed by this
realisation. After all, nature doesn’t need us to offer accounts of it. Our accounting for nature, for environmental matters,
typically speaks of a separation between humanity and nature and is not something that nature wants, needs, understands or
desires. We account for humans – for ourselves. This may seem/be obvious, but it brings us back to asking some really useful
basic questions.
Perhaps the first question is to enquire whether the essential focus of ‘‘environmental accounting’’ is actually
‘‘environmental’’. It turns out that much ‘‘environmental accounting’’ has little or nothing to do with nature or environment
as such.

3.1. Financial accounting

In the first place, the term ‘‘environment’’ as it is manifest in financial accounting, is typically taken to reflect a range of
costs, liabilities or potential risks/opportunities that derive, at some point at least, from matters perhaps conveniently
thought of as deriving from the natural environment in some way or other. The point being that is the impact on the
accounting categories that commends attention – not the environmental perturbations themselves. So, for example, the
contamination of land or the release of pollution are of interest to financial accounting – not because they are in some way
wrong, inappropriate, a challenge to nature or offensive in some way – but only to the extent that they may begin to affect the
numbers in the financial statements. It is perfectly obvious that it is the reflection of such matters in costs, prices, income
increases or reductions and so on which engages the attention of conventional financial accounting.
This is the context within which (I think) Thornton uses the term. Within these narrow parameters his deliberations are
probably relatively unexceptionable. But it is not at all obvious that this category of costs, prices, assets, liabilities and
income streams labelled ‘‘environmental’’ holds anything of especial interest in and of itself. In essence, two separate factors
seem to be at work.
First, a (newish) range of developments are starting to influence accounting categories through (principally) changing
costs and prices. Such influences might include such things as the changing tastes of consumers, limitations on raw material
or waste sinks or, most especially, changes in legislation. These are things that a business or an accountant might typically
label as ‘environmental’. But the accounting itself is not changing any more than it does when factors of (say) fashion, or
international relations or technological innovation affect costs and prices. If we are concerned with ‘environmental
accounting’ in this context, then we should be equally concerned with ‘fashion accounting’; ‘international relations
accounting’ and so on.9

8
As Thielemann effectively shows, market alien values are all those that make humanity and nature what it is and, ultimately, worth our effort in
enhancing, empowering and protecting it: love, happiness, ecology, beauty, instinct, friendship, embrace, harmony, etc. . .
9
Whether we might see these changing costs and prices as either organisationally focused recognition of categories of risk or as steps along the road
towards the full pricing of all externalities raises yet further arguments and issues.
464 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468

The second of these factors relates to developments with the potential to affect the accounting numbers – future
liabilities and asset retirement obligations are good examples. These developments are again only environmental in a
very weak sense – they are actually about risk – and (quite obviously) risk to the investors and the company, not risk
to nature. Thus, for much of financial accounting, whilst perhaps we may usefully explore accounting and the
environment through the conventional lens, it is stretching a point to suggest that this is, in any way, accounting for
the environment.
However, as we shall see briefly below, this whole issue can become somewhat more engaging when the lens of
conventional accounting is challenged by our attempts to make accounts of the (an?) environment itself.

3.2. Management accounting and environmental management

The perspective of the management accountant is a little more nuanced – although still principally an economistic
organisation-centred perspective that responds little to the concerns or needs of nature per se. Whilst once again the
category ‘‘environmental’’ comprises extant costs and prices relating to such things as land clean up, energy, waste and
packaging, at least in these categories the financial amounts provide an analogue for the volumes of (many of the) resources
taken from and returned to the natural (non-economic) environment. This may reflect not at all the values and concerns of
nature but it might provide a first pass at some suggestion of an organisation’s typically malign engagements with nature (to
the extent that such distinctions can be drawn sensibly). It is in this sense that Environmental Management Systems (EMS)
are developed and operate.
Such systems whilst hardly starting from a deep ecological point of view do set out to articulate all – or nearly all – of
an organisation’s immediate engagements with the natural environment and, in so doing, offer a new, different
perspective on the organisation and its activities. Seen typically as an input-output model (often expressed as an eco-
balance and sometimes incorporating life-cycle assessments) which explicitly recognises every withdrawal from
(‘resource input’) and discharges to (‘waste, product and packaging output’) the natural environment. EMS offers more
than a simple cost-driven articulation of organisation-environment interaction. 10 Of course the motive for an
organisation’s development of an EMS is the fulfilment of the organisation’s objectives and these will, where appropriate,
include the usual focus of profit seeking. However, the system itself tends to start from – and manifest – a vision of
organisational life that recognises ‘the’ environment as a thing in and of itself – albeit instrumentally. The importance of
this, therefore, is that an alternative vision of organisation activity beyond the simply economic is offered and employed
(and becomes more widely understood). As a consequence, the EMS and the environmental manager may very well
manifest their role less as an attempt to find profit through environmental interaction and more as an expression of
seeking ways to reduce/improve environmental interactions that can be ‘sold’ to the organisation through variations on
the business case.11
Without wishing to exaggerate the case, the point of much EMS is to seek an articulation of environmental interactions
(albeit a clearly organisation-centric, modernist articulation) that is wider and more aware of the environment-as-nature
than can typically ever be the case when the lens is purely economic and financial, (Baxter, 2011). It is in this context that the
management accounting system can seek to be creative and find new ‘win-win’ possibilities (Walley and Whitehead, 1994).
Accounts of energy or of resources, accountings expressed in weights, volumes or carbon dioxide equivalents become more
interesting and more possible. New accounts can emerge – although whether they have iterative or transformative potential
remains a disputed matter. It is in this context that so much is claimed for environmental management accounting systems
as a mechanism for the evolution of new organisational forms which reflect the potential – and offer the possibility – of
delivering environmental sustainability, (Schaltegger and Burritt, 2000; Schaltegger and Wagner, 2006a). These claims and
optimism are disputed (York et al., 2003; Young and Tilley, 2006).
So unlike the very strict and narrow perspective on ‘‘environment’’ that financial accountants bring to bear, the potential
within (environmental) management accounting, whilst still (of course) managerialist and marginalist, is wider, more
encompassing and raises the visibility and awareness of the environment for an organisation.
This is the sort of thinking that leads, ultimately, to the construction of new ‘‘environmental accounts’’. The most visible
manifestation of these new accounts is the global phenomenon of environmental reporting.12

10
Of course, this says nothing about the complexities of the ecologies from which these elements are drawn and to which they are returned – or the
interactions that this in turn creates, (Birkin and Polesie, 2012).
11
Now the business case is a diverse, ubiquitous and widely mistrusted notion but has utility in helping to articulate the potentials and limits on
organisational discretion and the extent to which organisational activities are genuinely constrained (Spence and Gray, 2007).
12
The terminology around environmental reports is far from helpful. Environmental reports are generally part of the family of ‘stand alone’ reports
produced by organisations and which include titles as varied as social reports, citizenship reports, responsibility reports and sustainability reports, (KPMG,
2011). It is frequently impossible – and undesirable – to separate the ‘‘vironmental’’omponents of such reports from the ‘‘social’’lements for example. More
recently there has been a tendency to start to bring these data back into the annual report under the misleading initiative incorrectly called Integrated
Reporting.
 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468 465

3.3. Environmental reports

The explanations for the phenomenon of environmental reports are many and varied (see, for example, Buhr, 2007; Buhr
and Reiter, 2006). Broadly speaking it seems apparent that these accounts13 provide some combination of: a signal to salient
stakeholders (typically investors and regulators); a narcissistic articulation of the unchallengeable but clearly admirable
qualities of the organisation, its values and its directors; an articulation of what the environment means to the organisation
(or what they would like you to believe that it means to them); an attempt at influence and manipulation often intended in
ways of legitimation; or, on occasions, a genuine attempt to articulate the extent of an organisation’s interactions with its
non-economic, natural environment.
A major problem with these environmental accounts is that, with very few exceptions, they are woefully poor accounts if
judged by standards of information characteristics and communication quality (Adams, 2004; O’Dwyer et al., 2005; Laine,
2010).14 This is a great shame as the potential of environmental reporting is considerable. But voluntary environmental (and
social and sustainability) reporting is beset by a remarkable irony. On the one hand, the corporate world expends enormous
efforts to produce extremely poor environmental reports whilst working hard to ensure that such reports are neither
legislated for nor analysed in legitimate fora and exposed as the trivia that they are. Whilst on the other hand,
experimentation and practice show that substantive and compelling accounts of the environment are entirely feasible and
offer the possibility of a truly significant mechanism for the discharge of substantive accountability regarding environmental
matters and economic modernity15. The irony is that it probably involved more expense and effort to ensure that the
development of these reports does not have any material bearing on accountability.

3.4. Accountability and new accounts

It is the radical potential of this accountability (Owen, 2008) that increasingly drives the growing literature and
experimentation with environmental (and indeed social and sustainability) accountability (Adams, 2004; Bebbington, 2007;
Bebbington and Gray, 2001; Cooper et al., 2005; Epstein, 2008; Herbohn, 2005; Jones, 2003; Lamberton, 2000). A key
component of this experimentation and research is the demonstration of the way in which the ‘‘market alien values’’ of
nature and society (Thielemann, 2000) may be (albeit tentatively) expressed in more complete and different ways in an
attempt to offer counter-narratives to business rhetoric (Milne et al., 2003, 2009; Laine, 2010). Additionally, in seeking
alterative accounts, the accounts seek to puncture the hyper-reality of business representation, (Dey et al., 2011).
Once we step beyond the idea that environmental accounts are primarily produced in support of the pursuit of the
organisation’s own objectives and/or those of its statutory owners as economic agents, there are a range of reasons why the
development of and pursuit of environmental accounting might be desirable from a broader perspective. And a focus on
those reasons will inevitably lead, I would suggest, to a realisation that the employment of debits and credits and the
conformance or otherwise with accounting standards (in the manner reported in ‘‘Green Eyeshades’’) seems a complete
irrelevance.
In the first place, democratic considerations lead to the broad principle that a people have a right to information about
that which affects them. As both the natural environment and people (to the extent that they might be separable) are clearly
affected by organisational activity – most notably in the pursuit of economic growth and profit – the people are due an
accountability concerning this effect (Brown, 2009). An environmental account designed to discharge accountability needs
to offer an account of the environmental matters implicated in the organisation’s activities in as plausible and as reliable
manner as possible – as judged by whatever criteria we might explicitly choose.
Now closeness (in a broadly rawlsian sense) might be an issue here and if we were talking of smaller organisations and
those with which the associated people were closely entangled then such accounts need not be formal accounts (Lehman,
2001; Brown, 2009). However, we are typically talking of larger organisations wherein closeness is absent. In these
circumstances, formal accounts become essential to the discharge of accountability. That such accountability is rarely
discharged by environmental reporting in no way undermines the normative principle here. The accountability remains
regardless of its discharge (Brown, 2009)
It is crucial to notice that the non-discharge of accountability might typically speak of power asymmetry – that is, unlike
the case more usually addressed in some areas of the literature (see, for example, Roberts, 2009; McKernan and McPhail,
2012) – the role of accountability also has the critical role of holding the powerful to account. As I see it, our task as
researchers is to find ways to seek to expose and enforce that accountability even when neither the demos nor the polity is
able/willing to ensure it through extant regulatory forces. Whilst there has been a clear and transparent failure to hold
(particularly) corporations to account for their social, environmental and sustainability performance, that is no fault of either
accountability nor of the putative environmental accounts. Had such accounts been applied, they would – in all

13
And they are accounts in the broad sense of the term (Gray, 2010).
14
That these accounts are adjudged to be admirable against standards such as GRI then raises a considerable range of questions about those standards
themselves (Moneva et al., 2006; Dumay et al., 2010).
15
There are very many examples of these experiments and suggestions and any textbook on social and/or environmental accounting will provide
illustrations, but see also Barter and Bebbington (2010) and Hopwood et al. (2010).
466 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468

For most of the last century….. [W]e mined our way

to growth. We burned our way to prosperity. We
believed in consumpon without
consequences.Those days are gone. …………Over
me, that model is a recipe for naonal disaster. It
is a global suicide pact.

We need a revoluon………It is easy to mouth the

words “sustainable development”, but to make it
happen we have to be prepared to make major
changes -- in our lifestyles, our economic models,
our social organizaon, and our polical life.
…………We are running out of me.

The ancients saw no division between themselves

and the natural world. They understood how to live
in harmony with the world around them.It is me
to recover that sense of living harmoniously for our
economies and our sociees.

Fig. 2. Excerpts from UN General Secretary Ban-Ki Moon remarks at Davos, Switzerland, 28 January 2011 to the World Economic Forum Session on
Redefining Sustainable Development.

probability – have encouraged transformation in the relationships of society, the state and the market vis a vis the natural
environment (Owen, 2008).
A second reason that the pursuit of environmental accounts in a democratic setting might very well be desirable is that
such accounts, undertaken sensibly, would permit and encourage the assessment of the veracity of claims made by capital
regarding social responsibility and environmental probity.16 It is certainly the case that no financial claim made by a
corporation would be given any credence at all were it not backed up by the paraphernalia of financial statements and audit.
The accounting and auditing function is rather more than simply ritualistic.
The influence of corporations on the natural environment itself is probably not in dispute (Johnson, 2012; Porritt, 2005;
Birkin and Polesie, 2012) but its responsibility to that environment and how business collectively is (or is not) responding is a
far more oblique matter coloured as it is by the myriad of claims and assertions made by and on behalf of business (Milne
et al., 2009; Moneva et al., 2006; Laine, 2010). A proper discharge of the accountability due to those with rights to
information – through the construction and release of reasonably coherent environmental accounts – would permit, at a
minimum, a considered assessment of the claims made by large business organisations on such matters as their ‘‘pursuit of
our sustainable development vision’’, ‘‘considering sustainability as part of everything we do’’ and ‘‘addressing our key
sustainability issues’’ and other unsupported claims and assertions made by many large companies over the last 20 years or
so.17
Such an ambition does not necessarily need to embrace debits, credits or accounting standards. Whilst it may well be the
case that it is only through debits and credits that one can talk to professional accountants, the corollary is certainly not true
– they do not necessarily listen when debits and credits are offered, (see, for example, Bebbington et al., 2001a, 2001b): the
restriction to these ideas is a great deal deeper than simple technicalities. And should it be the case that accountants can only
listen to a language of debits and credits then the problem lies, we might suggest, with accountants and their education. The
motivation offered here for environmental accounts goes beyond this reasoning and suggests that their importance and
usefulness would lie rather in how well they offered a challenge to unsupported assertions on matters that are nothing short
of life and death.
The range of environmental (and social and sustainability) accounts that might be derived with these sorts of concerns at
their heart is considerable – some may use debits and credits and many will not. Such accounts can be derived by, for
example, rearranging categories of recordings; making different things visible; offering new social constructs; deriving
extant silent accounts; and so on and so on – the possibilities are limited only imagination, the purpose one holds for the
accounts – and the willingness of the powerful to consider such ideas and to permit their development. Oh, and accountants’
willingness to contemplate possibilities beyond current accounting standards.

4. Some concluding comments

I have understood the essential thrust in Dan Thornton’s paper to be that there is, to all intents and purposes, only one
thing that can be called ‘‘accounting’’ and as accountants our interest and concerns should focus only on that. Further, if I read

16
That one cannot do this from reports which are ‘‘assured’’ays all that really needs saying about the current state of ‘‘assurance’’.
17
These are not direct quotes but are (carefully) derived from the reports of Halliburton (2008), Coca Cola (2009) and BP (2011) as examples. There is no
shortage of such illustrations.
 R. Gray / Critical Perspectives on Accounting 24 (2013) 459–468 467

the paper correctly, we are asked to frame our explorations within the (typically implicit) assumptions of that ex cathedra
accounting. Thus we should do nothing that might seek to recognise the highly political nature of accounting and accounting
standards or anything to challenge accounting’s role at the heart of the growth of international financial capitalism. Then,
(again if I follow correctly) any new issue – such as environmental concern – must and should be explored only through the
lens of that extant accounting (Solomons, 1974).
One doesn’t have to be any kind of critical theorist to find these ideas contestable. Whilst I find much to enjoy in the
elements of basic accounting and I can find much to celebrate in small-scale capitalism and in social democratic capitalism,
this does not blind me to the realisation that international financial capitalism and its principal engines and beneficiaries –
the multi-national corporations – are in all probability amongst the principal causes of environmental crisis, social injustice
and planetary un-sustainability. To the extent that these observations are correct (see, for example, WWF, 2012; Randers,
2012) then to approach our concern through the old lens of managerialism and accounting convention is to entirely miss the
point – as Ban-Ki Moon suggests (Fig. 2)
So, once accounting can be imagined as having some task beyond serving the managers of large corporations and their
fickle investors then we start to see that accounting might well have an important function in helping individuals and
societies navigate the worst excesses of modernity’s destructive relationship with nature and, indeed, with people. A world
in which the larger organisations disclosed such things as eco-balances and ecological footprints; in which the interactions in
all relationships between organisations and stakeholders were exposed, warts and all; when society could know the full
extent of an organisation’s compliance with law and quasi law; would be unlikely to look a great deal like the world we now
inhabit. This, I suggest, is the function of social, environmental and sustainability accounting – or, as I prefer to call it,
‘‘accounting’’.

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