A system designed to identify, collect, analyze, and use two types of information for both internal decision-making and external reporting: monetary and physical. It focuses on the impact of business activities on the environment, providing a comprehensive view of related costs and performance. This methodology assists organizations in understanding the environmental consequences of their actions, quantifying resource consumption, and assessing the cost of waste management.
The application of this accounting approach allows for improved resource efficiency, waste reduction, and cost savings. It provides a basis for informed investment decisions, facilitates compliance with environmental regulations, and enhances an organization’s reputation by demonstrating environmental stewardship. Its development stems from a growing awareness of the financial implications of environmental issues and a need for businesses to integrate environmental considerations into their operational strategies.