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Green accounting and its application: a study on reporting practices of

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Article in World Review of Entrepreneurship Management and Sustainable Development · January 2022
DOI: 10.1504/WREMSD.2022.120767

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World Review of Entrepreneurship, Management and Sust. Development, Vol. 18, Nos. 1/2, 2022 23

Green accounting and its application: a study on

reporting practices of environmental accounting
in India

K.R. Gola and Priyam Mendiratta

School of Business Studies,
Sharda University, Greater Noida,
Uttar Pradesh, India
Email: kr.gola@sharda.ac.in
Email: priyam.mendiratta@gmail.com

Gaurav Gupta*
School of Business and Management,
CHRIST (Deemed to be University),
NCR Campus, India
Email: gaurav30ap@gmail.com
*Corresponding author

Mridul Dharwal
School of Business Studies,
Sharda University, Greater Noida,
Uttar Pradesh, India
Email: mridul.dharwal@sharda.ac.in

Abstract: Green Accounting is an important device for understanding the role

of business ventures in the economy towards environmental security and
welfare. It is a well-known term for environment and natural resources
accounting. Many companies all over the world have initiated the practices of
making environmental disclosures in their annual reports. However, these
practices are still largely voluntary in nature. The objective of this research
paper is to study the environment-related disclosures of companies taken from
Nifty 50 based on the summary of Global Reporting Standards. Content
Analysis, both sector-wise and keyword-wise is used on the annual reports of
29 sample companies using MAXQDA software. A high count of the
formulated keywords is observed in some relevant sectors of Energy, Cement
and Metals.

Keywords: green accounting; environmental disclosures; global reporting

initiatives; content analysis.

Reference to this paper should be made as follows: Gola, K.R., Mendiratta, P.,
Gupta, G. and Dharwal, M. (2022) ‘Green accounting and its application:
a study on reporting practices of environmental accounting in India’,
World Review of Entrepreneurship, Management and Sustainable Development,
Vol. 18, Nos. 1/2, pp.23–39.

Copyright © 2022 Inderscience Enterprises Ltd.

24 K.R. Gola et al.

Biographical notes: K.R. Gola is an Assistant Professor in the Area of Finance

and Accounting at School of Business Studies, Sharda University. He
completed his PhD degree from Sharda University in the field of Banking and
Finance. His research interests include in the field of financing of MSMEs,
accounting and corporate finance.

Priyam Mendiratta is an Assistant Professor in the Area of Finance and

Accounting at School of Business Studies, Sharda University. She completed
her Graduation and Post-Graduation degrees in Commerce from University of
Delhi. She is pursuing CFA Level 3.

Gaurav Gupta is an Assistant Professor in the School of Business and

Management at the CHRIST (Deemed to be University), NCR Campus, India.
He earned his Master’s degree and PhD degree from Punjabi University
Patiala. His research interests are in the areas of brand management and Indian
culture.

Mridul Dharwal is Professor in the Area of Economics at School of Business

Studies, Sharda University. He has travelled many of countries for academic
assignments and for developing the understanding about the various
economies. He has a rich experience and expertise to conduct Training
Sessions on Teaching Strategy, Teaching-Learning Process and Classroom
Management.

1 Introduction

Green accounting is a means to a sustainable future (Soares et al., 2017). This is because
companies are considering and formulating steps to promote environment-friendly
practices for the present and the future. A vigilant analysis of expenses and benefits of
environmental pollution is extremely vital at present. Green accounting is a management
tool for better consideration of environmental costs (Rewadikar, 2014). Hence, green
accounting can be thought of as something synonymous with Environmental Reporting
(Cho and Patten, 2013). Green Accounting guides the stakeholders in how taking into
account the environmental factors can be a means for sustainability (Pearce et al., 1996).
It intends to discover how significant it is for an organisation to actualise green
accounting and monitor what it is accepting from the environment and what it is giving
back consequently. The duty towards the environment has turned out to be the most
significant factor in the corporate social responsibility of a firm (InfoCat, 2017).
When the Indian organisations are making their financial statements, they consider
the inner costs, for example, the works cost and materials cost which straightforwardly
influence the financial position of the association (The European Commission, 2011). It
very well may be utilised as a device by the organisation to keep a record of what it has
been responsibility to provide something reverse to environment in return to what it has
got and evaluate the information concerning what measures must be taken to spare the
environment which is, in the end, getting exhausted. As times have passed, constant
deterioration of the environment a reason of concern among various stakeholder groups,
particularly Government, Non-Government Organisations, and national-international level
committees set up to preserve the environment and promote sustainable development. As a
 Green accounting and its application 25

response to control environmental degradation, international treaties like the Kyoto

Protocol, an addition to the United Nations Framework Convention on Climate Change
(UNFCCC), came into force in 2005, which aimed at the diminution of greenhouse gases
(Kyoto Protocol, 2005). Another relevant example would be the Clean Development
Mechanism (CDM), which encouraged the first world countries to make investments in
the form of technology and infrastructure in the third world countries to reduce negative
externalities to the environment in such countries. A related measure is the calculation of
carbon footprint, which measures the emission of Carbon Dioxide (CO2) by an
individual, an entity, or a country. Hence, it would be justifiable to say that impact of
human and corporate actions on the environment is a major cause of concern world over.
A business entity is considered to play a key role in this as it interacts on a day-to-day
basis with its surrounding environment. Therefore, needless to say, a business entity
bears immense responsibility towards the environment.
Directly or indirectly, financial reporting measurements of business entities only
focus on the traditional accounting data tough the business entity of today is involved
with the environment in such a complex way, which also impacts its surrounding
environment, and its sole existence being dependent on this environment. There is the
raging debate that surrounds over the query of dimension in financial exposure –
primarily since of a seeming movement missing from the conventional basis of
measurement (historical cost) to a latest basis (fair value). The inherent limitations of
financial accounting practices that focus on the recording of quantifiable data and
choosing to disregard the non-monetary data have been plaguing the genuineness of the
financial reports of an entity from the environmental perspective, hence making it
difficult to gauge the repercussions which entities have on the environment. Looking at
the prominence of the subject of including environmental aspects in financial reporting, it
has still not envisaged the attention of the business world that it so deserves.

1.1 Need and importance of the study

Each business is duty-bound to make the fullest conceivable utilisation of its resources –
both human and material. There is a need for best practices followed by the leading
companies as to how they assess the environmental costs and benefits and report them to
the stakeholders. Dilapidation and damage like water and air pollution, soil erosion, solid
waste and the loss of biodiversity and the problem of marine pollution. The businesses
should try to set aside a portion of money for environmental safety and stability.
Consequently, companies are likely to description for the employ of materials that may
harm the environment. Green accounting is in a preliminary stage in India, this is because
a few accounting standards do aim to capture the environmental expenditure in the
balance sheet, but it is still in its nascent stage. The information is still voluntary and not
very concrete. These disclosures do not bear any competent approval (Negash, 2012).
The reports focusing on environmental disclosures are primarily unstructured, with the
extent of reporting varying from sector to sector. Various regulations have been proposed
from time to time but still, the reporting remains scarce (Sahay, 2004).
The need for Green Accounting can be understood as follows. If the cost of degrading
the environment is not explicitly incorporated in the financial statements of an entity,
it will be perceived to be fulfilling the expectations of the stakeholders by meeting
the required rate of return, irrespective of how much socially and environmentally
26 K.R. Gola et al.

destructive it is, threatening the survival. This will incorrectly disclose whether an entity
can cover its cost of capital, it is just appearing to be, without considering the negative
quantitative externalities to the environment. Hence, the practice of Green Accounting is,
without doubt, expanding. The advent of ESG (Environmental, Social and Governance)
in 2005 supports this cause. The traditional school of thought focused on maximising the
shareholder value without paying heed to the impact it had on the environment. However,
this notion is changing. It has also been experiential that stocks of sustainable businesses
tend to considerably better their less sustainable counterparts. This can be attributed to
the rising concerns of the stakeholders about their environment. With the initiate
of Global Reporting Initiative (GRI), founded in the year 1997, more and more
business firms are integrating sustainable accounting into their financial reports
(Globalreporting.org).

1.2 Objectives of the study

The main objective of the study is to explore the concept of green accounting. The
authors try to understand the application aspect of Green Accounting practices in relation
to the keywords formulated based on Global Reporting Initiatives (2020). An endeavour
that has been made to examine the company’s practices relating to the voluntary
disclosures of a sample of Indian companies listed on NSE. Extended sector-wise
analysis and keyword-wise analysis of the companies have also been attempted. The
paper tries to be different from the previous studies in a similar area in terms of the
sample size and a different set of self-formulated key-words drawn from the Global
Reporting Initiatives, which has not been initiated earlier.

2 Literature review

Ramesh and Madegoda (2019) environmental accounting practices in India: a relative

study of the perception of academicians and professionals. This paper explores the
academician’s and experts’ views on possible areas of environmental accounting and
practices. In India, there have been limited guidelines and recommendations that have
been issued by the authorities. Nevertheless, the present regulations are not sufficient and
consequently, there is a need to have a greater diversity in the environmental accounting
and disclosure practices. Swain et al. (2017) “Environmental Disclosure Practices in
India: Evidence from Top 50 Companies of BSE”. The study observes the reliability of
Indian corporate in revealing environmental aspects as per GRI guidelines. It additionally
makes an endeavour to recognise the degree of natural exposure under GRI rules by
sample organisations. It was observed that there is no significant dissimilarity in the
fraction of exposure and no divulgence of ecological elements like material, biodiversity,
item and administrations, consistence, and transport. The relationship was found between
ecological variables and revelations of sample organisations. Chaklader et al. (2015) “A
Study of Corporate Environmental Disclosure Practices of Companies Doing Business in
India” used regression analysis to study green disclosures. The study illustrates the effect
of different independent variables on Environmental Disclosure Index (EDI). It reveals
that natural accreditation decreases the office cost as it diminishes the observing
expense since the organisations deliberately pursue an outer arrangement of estimated
 Green accounting and its application 27

targets. Iqbal et al. (2013) “Effect of Environmental Accounting Implementation,

Environmental Performance and Environmental Information Disclosure as Mediation on
Company Value”) the paper examines the stakeholder theory and legality as well as Eco-
efficient policies linked to the influence of environmental accounting application and
environmental performance and environmental disclosure. This comes out with a view
that environmental accounting application affects the environmental information
disclosure, environmental disclosure effects on the company’s value, environmental
performance effect on environmental information disclosure. In Kabir and Akinnusi
(2012), corporate social and environmental accounting information reporting practices in
Swaziland. The study endeavours to find out CSR reporting practices and examines the
kind and degree of such reporting in the financial statements of companies in Swaziland.
The study gathers information from 30 selected manufacturing firms using questionnaires
and corporate reports. This work employ content analysis of corporate publications.
However, the outcomes of the paper demonstrate that the perception of CSR is equally
new in Swaziland and very some companies divulge corporate social responsibility data
in the corporate report. Sen et al. (2011) “Corporate Environmental Disclosure Practices
in India.” The objective was to recognise the accessible status of environmental
disclosure practices in India .The study reveals the stage of disclosure of ecological
information contrasts across industries following businesses and the information
evidence shows in the annual reports is found to be further qualitative than quantitative.
In Gray and Laughlin (2011), Green Accounting and the Blue Meanies, undertook a
study the purpose of which was to resume the particular concern of accounting and
auditing journal which was published in 1991 and which wanted to encourage the green
accounting to discuss, to assess that issue and, in particular, to evaluate what we might
discover regarding the growth of the social and environmental accounting. It likewise
showed some hypothetical naivety and a beguiling good faith and getting trust in the
intensity of sensible contention. Reflectively, the field has extended extensively and has
caused numerous advances in hypothetical and experimental seeing yet scientists have all
the earmarks of being less ready to look at the crucial issues that initially persuaded the
improvement of the field. In Chatterjee and Mir (2008), “The Current Status of
Environmental Reporting by Indian Companies.” the purpose of the study was to explore
the position of environmental reporting by domestic companies in their annual reports
based on authenticity theory. The study comes out with the result that most of the Indian
corporation has indeed revealed environmental information on the websites and in their
annual report. In Ahmad and Sulaiman (2004), “Environment Disclosure in Malaysia
Annual Reports: A Legitimacy Theory Perspective” the paper tries to define the character
of ecological disclosures norms made and the motives for the disclosure in the
framework of Malaysian industrial products and construction companies. The research
paper finding illustrates some narrow support for legitimacy theory in amplification of
the nature of disclosure, as well as the causes for the revelation. The degree of
environmental disclosures is, nonetheless, very low. A study conducted in Brazil
(Fernandes et al., 2018) identified certain characteristics of the Board of Directors which
influence the environment reporting in companies. It was observed that the independence
of the board is one of the statistically significant parameters which have a positive
bearing on environmental reporting. Another 5-year longitudinal study conducted in the
area of Middle Eastern Arab and North Africa on environmental disclosures in company
annual reports uses content analysis as the tool (Gerged et al., 2017). The sample size
28 K.R. Gola et al.

is 180 non-financial companies. The disclosures increased over the period and hinted
sustainability, however, the reporting was still low as compared to other regions’ world
over.

2.1 Research gap

The idea has been borrowed from the study of intellectual capital disclosures using
Content Analysis on which much work has already been done. It has been proved to
capture disclosures in financial statements of companies appropriately and efficiently. It
is probably one of the initial works to apply the tool of Content Analysis to capture green
disclosures of companies listed on NSE using the key-words reflected in GRI Standards.
This can help to fill some of the research gaps in this particular area and give a fresh
approach to study the environmental disclosures by companies. The main focus was to
cover the application of green accounting and its reporting practices of the companies in
the manufacturing industry as these are perceived to be having the maximum impact on
the environment. To survive in this fiercely competitive business world, the majority of
the industrial and business houses all over the globe are assimilating the environmental
aspects in their business operations.

2.2 Research methodology

The paper studies the disclosures on sustainability made by Indian companies. Content
Analysis has been used to capture the level of such disclosures. Keywords used for the
purpose of content analysis have been framed based on the GRI Standards. Companies
listed on the Nifty 50 index have been taken as the sample companies. However, for the
purpose of our paper, we have excluded the companies in the services, financial services,
IT, media and telecom sectors. The main focus was to cover the reporting practices of the
companies in the manufacturing industry as these are perceived to be having the most
impact on the environment. Therefore, we were left with 30 companies. though, due to
the non-availability of the required data, one company was further removed from the
sample, thus leaving us with a total of 29 companies. A cross-sectional analysis of the
secondary data in the form of annual reports for the financial year ending 2018 in the pdf
format downloaded from the official websites of the sample companies has been the
chosen methodology. MAXQDA has been used for applying the chosen tool. Word-count
or frequency for the proposed key terms is taken as a proxy to gauge the extent of
reporting in the sample companies. The design used in this study is a descriptive research
design. It is suitable to apply this method as this research explains the relationships
between different variables & draws a conclusion from them.

3 Overview of GRI standards

In order to prepare Sustainability Reports, business entities are required to use these
guidelines in a defined order. To start with, there are a set of three Universal Standards
(GRI 101, 102 and 103). As implied by the name itself, these standards are required to be
used by every business entity that is engaged in the formulation of a Sustainability
Report. Subsequent to this, a business entity is required to choose from a set of three
 Green accounting and its application 29

Topic-Specific Standards, namely, Economic, Environmental, and Social, on which the

company wants to make material disclosures (GRI 200, 300 and 400). These are based
on the Triple-Bottom-Line Approach. The goal of the GRI standards is to provide
transparency and a common understanding of sustainability reporting of companes.
Some key highlights of the Universal Standards have been discussed further.

3.1 GRI 101 foundations

This standard offers a kick-start to organisations that plan to report as per the GRI
Standards by providing a broad framework. There is no compulsion as to the size,
geographical location, sector an organisation should fall in. This standard is effective
from 1st of July, 2018, albeit, organisations are permitted to use this from an earlier date.
The Reporting Principles under this standard focus on primarily two features of a
sustainability report; it’s content and quality. An organisation needs to identify its
stakeholders which are/can be impacted by the organisation’s activities and needs to
disclose its idea of sustainability to these stakeholders. This standard requires material
disclosures of the contributions or expected contributions made by the business entity,
both positive as well as negative contributions. These material disclosures should be
prioritised in line with the degree to which they can possibly influence the decision-
making of the stakeholders in the relevant reporting period. The quality of the reporting
is assessed on various parameters like Accuracy, Clarity, Balance, Comparability,
Reliability and Timeliness. An organisation can claim the use of GRI Standards by
sending the reports to GRI.

3.2 GRI 102 general disclosures

This standard starts with the Organisational Profile, highlighting aspects like the name of
the entity, products and services offered, locations, supply chain, information of its
employees, and the likes. This standard explicitly requires the disclosure by the key
management personnel of the strategies adopted by the company to ensure sustainable
practices, indicating over-performance or under-performance in the relevant reporting
period. Sustainable practices can be somewhat correlated to the values and ethics
practiced by a business entity, therefore, the ethics policy of the entity has to be discussed
under this standard. The reporting entity needs to have the highest governance body
which will lay down the policies related to the environmental and social topics. This
body will also be responsible for the timely implementation of these policies and due
diligence processes. In the end, this body is entrusted with the task of formally reviewing
and approving the sustainability report.

3.3 GRI 103 management approach

Managers need to discuss why the topics discussed in the report are material to the
stakeholders and any limitations concerning the disclosures. Moving onto the Topic-
specific standards, these are required to be reported as discussed. These are used together
with GRI 103.
30 K.R. Gola et al.

3.4 GRI 200 economic performances

The foremost disclosure under this standard is the Revenues generated by the
organisation and the costs incurred which give the Economic Value Retained for the
period.
Economic value retained = Revenue (value generated) – Costs (value distributed).
An organisation then needs to enumerate the possible opportunities and threats that
can emerge from climate change which can alter the revenues and costs and expenditures
of the organisation.

3.5 GRI 300 environmental performances

Keeping in view our discussion for Green Accounting, this topic-specific standard needs
to be discussed at length.

3.5.1 GRI 301 materials

Under the first disclosure on Materials, the organisation needs to report by volume or by
weight, the proportion of non-renewable and renewable materials which have been
consumed by the business in the relevant reporting period for its manufacturing and
packaging of the products and services offered. The second disclosure focuses on the
percentage of recycled materials used as inputs, i.e., (Total recycled inputs materials used
/ Total inputs) * 100.
On similar lines, the standard requites the third disclosure on reclaimed products or
recycled and reused products, and the packaging materials used by the organisation, i.e.,
(Products and their packaging materials reclaimed / Products sold) * 100.

3.5.2 GRI 302 energy

Under the foremost disclosure on Energy, the entity needs to report the total consumption
of energy generated in the form of electricity, heating, cooling or steam from either non-
renewable resources or renewable resources. Total energy consumed = renewable and
non- renewable fuel consumed + heating and electricity + cooling+ self-generated energy
which are not consumed – electricity, cooling, heating and vapor sold out.
The second disclosure under this standard deals with the energy consumed by the
organisation outside of it, i.e., through its upstream or downstream operations dealing
with its suppliers and customers respectively.
The third disclosure under energy deals with the energy intensity ratio of the entity.
This implies the required energy by the entity per activity or output. This can be defined
as a parameter for an organisation’s efficiency.
The fourth disclosure under the same category deals with a reduction in energy
consumption, implying the energy conserved by the entity as a result of some direct or
indirect measures. This is calculated in contrast to a base year determined by the
organisation. The type of reduced energy consumption also needs to be reported, i.e.,
through electricity, heating, cooling, or steam.
The fifth sub-disclosure under energy deals with the reductions in energy
consumption for products and services sold during the reporting period, in contrast to the
predetermined base year.
 Green accounting and its application 31

3.5.3 GRI 303 water and effluents

The first disclosure under the water category deals with interactions with water as a
shared resource. This deals with how an organisation is interacting with water in terms of
the water withdrawn, consumed and discharged as well as the usage of water across its
value chain. An organisation needs to disclose its water-related impacts on society and
how it addresses such impacts.
The second standard deals with the supervision of water discharge and its associated
collisions. The reporting entity needs to determine a minimum standard of water
discharged, with emphasis on the condition of the water body receiving the discharge.
This standard takes into consideration the properties of water like pH value or
temperature to ensure the protection of aquatic life, ecosystems, and humans directly or
indirectly related to that water body.
The third sub-standard deals with water withdrawn from all the sources namely
surface water, groundwater, created water as well as third-party water, by the
organisation, with special emphasis on water withdrawn from areas with water stress
conditions, category-wise. A separate disclosure detailing the use of freshwater out of the
total water withdrawn also needs to be reported.
Water consumption= Total water is withdrawn – Total water discharged

3.5.4 GRI 304 biodiversity

The first sub-standard under biodiversity deals with the functional units of an entity near
to or within areas granted the protected status or areas which are of very high value in
terms of their biodiversity but have not been granted the status of protected areas. The
organisation needs to disclose the type of function it performs in such area, namely,
office, manufacturing, or extraction, along with the size of such a functional unit.
The next sub-disclosure under the biodiversity category deals with the direct and
indirect impacts of such functional units of the entity on the surrounding biodiversity in
the form of infrastructure building, pollution, the introduction of pests, changes in the
composition of ecosystems to name a few. A specific disclosure needs to be made by the
reporting entity whether such alterations are temporary or permanent.
The third disclosure deals with total area and place of the habitats restored or
protected by the reporting organisation which needs to be verified by a competent
external authority. The extent to which such areas were restored also needs to be
disclosed, in contrast to its status at the last closing period.

3.5.5 GRI 305 emissions

The first and foremost disclosure under the Emissions category deals with the direct
emissions of Green House Gases in the form of carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), hydrofluorocarbons (HFCs) and the like in relation to a base year
established by the entity and the reason stating why the particular base year was chosen.
These emissions are a product of functions like self-generation of electricity, heating,
cooling and steam, burning of coal, transportation activities and the like.
32 K.R. Gola et al.

The next disclosure deals with the indirect emissions of Green House Gases which
include the gases emitted from functions related to energy like purchased or acquired
heating, cooling, electricity, and steam.
The third parameter includes the other indirect emissions of Green House Gases as a
result of functions not directly under the control of the organisation, like its upstream
activities including extraction of resources and downstream activities like the end-use of
its products.
The fourth disclosure under this category encompasses the intensity of emissions of
the Green House Gases by the functioning unit, bifurcated into direct emissions, indirect
emissions related to energy and other indirect emissions related to its upstream or
downstream activities, along with the gases included.

3.5.6 GRI 306 effluents and waste

These disclosures were later updated but are also found in GRI 303 albeit; an entity
disclosing GRI 306 for the very first time is advised to use GRI 303 by the standards.
The first sub-standard under the updated standards deals with the quality of water
discharged and the destination of such discharge.
The next sub-standard deals with the type of waste discharged, i.e., hazardous or
non-hazardous, along with the disposal methods used namely reused, recycled, compost,
landfills and the likes. The related impacts of such spills on the environments need
specific disclosures.
The fourth sub-standard deals with transportation of hazardous waste produced by the
functioning unit including such waste imported, exported and treated.

3.5.7 GRI 307 environmental compliance

This standard takes into account the non-compliance activities of the reporting entity
about its environment. The organisation is required to report any sanctions imposed on it
in the form of monetary or non-monetary burdens by the authority in-charge. This
provides information to the stakeholders regarding the degree of ethical practices adopted
by the entity. No such fine imposed on the entity should also be significantly disclosed.

3.5.8 GRI 308 supplier environmental assessment

The last disclosure under the GRI standards related to environment is focused on the
environmental impacts that are caused by the parties with which the reporting entity is
dealing, mainly the suppliers, and hence aims at minimising the negative externalities on
the environment by identifying the factors in the supply chain.
The first sub-disclosure here relates to the percentage of new suppliers identified by
the organisation taking into account the environmental impacts after the required due
diligence process before initiating any new relationship with the supplier. These help the
organisation by mitigating the negative impacts on the environment.
The second and last sub-disclosure related to the suppliers under the environment
disclosures category deals with the identification of suppliers causing negative impacts to
the environment and whether any subsequent actions were taken to improve the present
condition like percentage of suppliers with which agreements were formulated to
eliminate such impacts and the percentage of suppliers with which ongoing business
relationships were terminated due to the aforementioned reason.
 Green accounting and its application 33

3.6 GRI 400 social performances

The last set of standards deal with the employee aspect of the organisation. Provisions
related to new employees joining the organisation and employee turnover rate of the
organisation. The disclosures also include the benefits provided to permanent employees
and parental leaves. The standard deals with the regulations governing the relations
between the management and labor including any agreements on work-related health
hazards. The reporting entity needs to disclose the provisions for continuous training
and career development of employees provided on the job by the organisation. The
organisation needs to report gender and culture diversity prevailing in the organisation
and the remuneration in terms of basic salary offered to men and women with
opportunities provided to both the groups. If any incidents of discrimination have been
reported during the period of financial statement preparation, it needs to be specifically
disclosed, with corrective measures taken if any. Provisions pertaining to child labor and
forced labor with any incidents reported within the organisation or related to suppliers
need to be disclosed for the reporting period and such workers exposed to any type of
hazardous risk.

3.7 Formulation of key words

In reference to the discussion on the GRI Standards, a set of 25 keywords have been
formulated (see Table 1). These would be used to calculate the extent of disclosures
based on the word-count.
Table 1 Keywords to measure green reporting based on GRI Standards

Sustainable Plastic Carbon footprint Ecology Recycled material

Community Water conservation Environment friendly Species Bio diversity
Renewable Ecosystem Environmental impact Pollutants Energy
Pollution Waste management Air quality Water conservation

Natural Plantation Carbon emissions bodies/body Environmental

resources Non-renewable cost
Protected area
Source: Self-formulated.

4 Results

A total of 29 companies encompassing a variety of sectors. These include companies in

Consumer Goods (5), Automobile (6), Energy (7), Pharma (3), Metals (4), Cement and
Cement Products (C & CP) (2), Construction (1) and Fertilisers and Pesticides (F & P)
(1). The output of the content analysis to account for the presence or absence of the
chosen key words taking all the annual reports together for the selected companies has
been tabulated below (see Table 2).
34 K.R. Gola et al.

Table 2 Word-count for the keywords

Key words Total frequency Total percentage (%)

Sustainable 872 30.31
Community 816 28.36
Renewable 406 14.11
Pollution 161 5.60
Natural resources 104 3.61
Plastic 84 2.92
Water conservation 74 2.57
Ecosystem 68 2.36
Waste management 66 2.29
Plantation 60 2.09
Carbon footprint 31 1.08
Environment friendly 25 0.87
Environmental impact 24 0.83
Air quality 22 0.76
Carbon emissions 15 0.52
Ecology 12 0.42
Species 12 0.42
Pollutants 8 0.28
Water bodies/body 7 0.24
Non-renewable 5 0.17
Recycled material 5 0.17
Bio diversity 0 0.00
Energy conservation 0 0.00
Environmental cost 0 0.00
Protected area 0 0.00
Source: Self-formulated.
Moving onto a more comprehensive analysis of the disclosures, a sector-wise analysis of
sustainability reporting has been undertaken in the next Table 3. The frequencies have
been standardised taking into account the number of companies in a particular industry
by totaling the frequencies for one keyword at a time for the companies in a particular
industry divided by the number of companies in that industry. The numbers have been
rounded off to the nearest integer.
 Green accounting and its application 35

Table 3 Sector-wise word-count for the keywords

Consumer
Automobile Energy Pharma Metals C & CP Construction F&P
goods
38 14 46 14 48 44 22 27
12 33 43 15 46 21 40 32
14 8 36 6 10 15 19 3
3 3 10 11 6 6 6 4
2 2 3 0 16 1 1 2
3 5 6 1 1 1 0 1
5 3 3 1 1 3 4 1
2 3 6 1 2 0 4 0
2 2 5 1 1 1 3 4
1 2 4 1 2 3 7 2
1 1 1 1 1 2 1 3
1 1 2 0 1 1 0 1
1 1 1 0 1 0 1 1
0 1 2 0 1 2 0 0
0 0 2 0 1 0 3
0 0 2 0 0 0 0 0
0 1 1 0 1 0 0 1
0 0 1 0 0 1 0 0
1 0 1 0 0 0 1 0
0 0 0 0 0 0 0 0
0 0 0 0 0 1 3 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0
0
86 80 175 52 139 102 112 85
Source: Self-formulated.

4.1 Analysis of the results

Under this section of the paper, we would discuss whether the suggested terms have been
found in the annual reports of the sample companies or not. To further extend the
analysis, we tried to ascertain the section in which these terms were found. Attempts
have been made to theoretically link the voluntary disclosures on sustainability to the
sensitivity of investors in relation to these disclosures while parking their funds in a
company. An effort was also made to judge whether the companies are following the
kind of disclosure approach given by GRI.
36 K.R. Gola et al.

As earlier mentioned in the paper, the sample companies were taken from the NIFTY
50 index on the National Stock Exchange (NSE) of India. To state, the constituent
companies of the index represent approximately 53.4%, i.e., more than half of the total
traded value of all the stocks listed on NSE (NSE India). Thus, the chosen sample of
companies becomes all the more relevant because of the implied interest of the potential
as well as existing investors and, making the annual reports of these companies subject to
constant scrutiny by the interested parties.
The results vary across companies as well as industries. It can be seen from the
results that out of the 25 keywords selected for the study, the first 21 of these terms are
appearing in at least one of the annual reports. Three words, sustainable, community, and
renewable, were found in all of the annual reports. This should be not very surprising,
given the emphasis on protecting and safeguarding our environment by almost all the
regulatory authorities on a global basis. Also, considering India to be the second-most
populous country in the world, the efficient utilisation of our natural resources becomes
all the more important. Not even a single company was found to not use any of the
25 terms even once. The names of the sample firms are listed in the Appendix, along
with the results of MAXQDA.
The topmost sector to have the highest word-count for all the key terms combined
was energy, followed by the metals sector and then the construction sector. Bharat
Petroleum, ITC, NTPC, Reliance Industries and Vedantaare some companies which were
seen to have the maximum number of disclosures, more than 150-word counts in total.
Vedanta was seen to be having the maximum number of word-counts of more than 200.
The most used key-term in all of the annual reports combined was ‘sustainable’, with
a total word-count of 872, followed by the term ‘community’ appearing 816 times and
‘renewable’ appearing 406 times. However, terms like ‘carbon footprint’ have appeared
only 31 times in all the 29 reports combined, which paints not-a-very happy picture.
Accounting for just 1.08% of all the key-words, this empathises the fact that companies
have not talked much about the impact of their activities on the carbon compounds
polluting our environment. This can be reinstated, by looking at the disclosure of ‘carbon
emissions.’ It stays at a dismal word count of 15. Another parameter that solidifies this
claim further is the use of the term ‘environmental impact.’ With a count of as low as 24
across all the sectors together, this could imply that the companies are not really focusing
on the impact or outcome of their activities on nature. Making general statements with
relation to the environment loses its meaning unless the impact is not considered. A
‘before and after’ scenario after bringing about a conscious change in the activities of the
firm towards the environment would lend some quantification to the primarily qualitative
data on environmental disclosures.
Therefore, it can be seen that companies under the study are aware of their obligation
towards the community and are in progress of making sustainable efforts by getting
renewable resources into use. However, apart from these three terms, the remaining terms
have primarily appeared only once or not even once.
One more observation made while studying the annual reports was that the reporting
is still discursive in nature, mostly qualitative, with no strict guidelines laid down for the
same. The companies have adopted some framework proposed by the GRI guidelines,
however, no clear conclusion could be reached. It can be said that the potential and
existing investors still majorly rely on the income and position statement of the annual
reports, with information related to environmental disclosures an add on in the
sustainability reports of the companies.
 Green accounting and its application 37

5 Conclusions

Environmental accounting is an area that finds resources to use, measure, and

communicate the cost of a company’s or nation’s economic impact on the environment.
Numerous nations including India receiving environmental accounting idea therefore, in
India it is at a creating stage. In the study we have explored the application and
awareness of green accounting amongst the organisations, in this regard, we examined
IFRS and GRI for environmental or sustainable disclosure but in IFRS we could not find
any environmental disclosure. GRI discloses the specific disclosures GRI 307 & 308
which are connected to environmental reporting in the financial statements of the
organisations. Thus, GRI Standards provide a comprehensive set of provisions for
disclosing and quantifying the non-financial parameters of the organisation. Firms,
policymakers, and the stakeholders get a new dimension to evaluate the environmental
disclosures of the firms. Many companies all over the world have initiated the practices
of making environmental disclosers in their annual reports. Each business is duty-bound
to make the fullest conceivable utilisation of its resources. It is an extending field
concentrated on the management of resources and environmental effects, in addition to
an organisation’s income and costs. By utilising green accounting idea as a device, a
considerable lot of the environmental costs can be reduced by actualising greener
innovation. It features both the dedication of business undertakings to economic
prosperity and the costs forced in the form of pollution or resource degradation.
However, many provisions are subjective and may hamper comparability between
various organisations. Further, these are voluntary. Therefore, from the study, a need
emerges for some concrete accounting or reporting guidelines. The study suffers from
some limitations. The key-words chosen for the study are not exhaustive and can be
further increased to add some new terms which can more efficiently capture the
sustainability disclosures in the companies. The sample size is small. A broad-based
index can be taken.

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 Green accounting and its application 39

Appendix
S. No. Name of the company Nature of the company
1 Asian Paints Ltd. Consumer Goods
2 ULTRA TECH Cement & Cement Products
3 Bharat Petroleum Corporation Ltd. Energy
4 Britannia Industries Ltd. Consumer Goods
5 Cipla Ltd. Pharma
6 Coal India Ltd. Metals
7 Dr. Reddy’s Laboratories Ltd. Pharma
8 Eicher Motors Ltd. Automobile
9 GAIL (India) Ltd. Energy
10 Grasim Industries Ltd. Cement & Cement Products
11 Titan Annual Report Consumer Goods
12 Larsen & Toubro Construction
13 Coal India Ltd. Metals
14 Hero MotoCorp Ltd. Automobile
15 Hindalco Industries Ltd. Metals
16 Hindustan Unilever Ltd. Consumer Goods
17 ITC Ltd. Consumer Goods
18 Indian Oil Corporation Ltd. Energy
19 JSW Steel Ltd. Metals
20 Mahindra & Mahindra Ltd. Automobile
21 Maruti Suzuki India Ltd. Automobile
22 NTPC Ltd. Energy
23 Oil & Natural Gas Corporation Ltd. Energy
24 Power Grid Corporation of India Ltd. Energy
25 Reliance Industries Ltd. Energy
26 Vedanta Ltd. Metals
27 Sun Pharmaceutical Industries Ltd. Pharma
28 Tata Motors Ltd. Automobile
29 Tata Steel Ltd. Metals

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