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Environmental accounting is a subset of accounting proper, its target being to incorporate

both economic and environmental information. It can be conducted at the corporate level or
at the level of a national economy through the System of Integrated Environmental and
Economic Accounting, a satellite system to the National Accounts of Countries (among other
things, the National Accounts produce the estimates of Gross Domestic Product otherwise
known as GDP). Environmental accounting is a field that identifies resource use, measures
and communicates costs of a company’s or national economic impact on the environment.
Costs include costs to clean up or remediate contaminated sites, environmental fines,
penalties and taxes, purchase of pollution prevention technologies and waste management
costs. An environmental accounting system consists of environmentally differentiated
conventional accounting and ecological accounting. Environmentally differentiated
accounting measures effects of the natural environment on a company in monetary terms.
Ecological accounting measures the influence a company has on the environment, but in
physical measurements.

Environment is not only a word but also a definition of life. We do not think about our future
generation. We are so concerned of our business, property, bank balance, wealth etc. But who
will consume these? Interestingly, business doesn’t ask to make the world complex. Every
day we are destroying our environment and now Bangladesh is the fourth country with worst
urban air quality in the world.

Generations ago few people were aware of economics beyond their own jobs and expenses, and
Few companies thought beyond the economics of their profit and loss statements. Industries were
neither clean nor green, and gave little consideration to the environmental impact of their business.
Types of environmental accounting:

Environmental accounting is organized in three sub-disciplines: global, national, and

corporate environmental accounting, respectively. Corporate environmental accounting can
be further sub-divided into environmental management accounting and environmental
financial accounting.

Global environmental accounting is an accounting methodology that deals areas includes

energetic, ecology and economics at a worldwide level.

National environmental accounting is an accounting approach that deals with economics on

a country's level.

Internationally, environmental accounting has been formalised into the System of Integrated
Environmental and Economic Accounting, known as SEEA. SEEA grows out of the System
of National Accounts. The SEEA records the flows of raw materials (water, energy, minerals,
wood, etc.) from the environment to the economy, the exchanges of these materials within the
economy and the returns of wastes and pollutants to the environment. Also recorded are the
prices or shadow prices for these materials as are environment protection expenditures. SEEA
is used by 49 countries around the world.

Corporate environmental accounting focuses on the cost structure and environmental

performance of a company.

Environmental management accounting focuses on making internal business strategy


Environmental financial accounting is used to provide information needed by external

stakeholders on a company’s financial performa allows companies to prepare financial
reports for investors, lenders and other interested parties.
Objectives of Environmental Accounting

The objectives of environmental accounting and reporting are as follows:

1. To help in negotiation of the concept of environment and to with the society as a whole and the
environmental pressure group in particular.

2. To segregate and collaborate all environmental related flows and stocks of resources.

3. To minimize environmental impacts through improved product and process design.

4. To estimate the total expenditure on protection and enhancement of environment.

5. To assess changes in environment in terms of costs and benefits.

6. To ensure effective and efficient management of natural resources.

Objectives of the Study:

The research focuses on the environmental accounting concepts and reporting practices of

banking sector of Bangladesh. The study also covers the following specific objectives:

1. To find out the present environmental accounting practices of banking sector.

2. To find out whether the banking companies have taken any protection on environment.

3. To observe the position of environmental information in the annual report.

4. To observe the legal position of environmental accounting in Bangladesh.

Methodology & data Collection:

Scope of Environmental Accounting

Forms of Environmental accounting

1. Environmental management accounting

2. Environmental Financial Accounting (EFA)

3. Environmental National Accounting (ENA)



Environmental Accounting Concept of Banking Sector of Bangladesh:

Environmental Protections Activities Taken by the Banks:

Challenges of Environmental Accounting

Environment management accounting to reduce cost

Identify environmental costs

Identify opportunities to cut environmental costs




Transport and travel

Consumables and raw materials

Allocate environmental costs to specific processes

Set environmental targets to increase profits

Why separate Environmental Accounting and Auditing is important?

6.1 . Legal Status of Environment Accounting and Reporting:

Since 1989 in Bangladesh a separate ministry for Forest and Environment has

been functioning in order to conserve the environment of the country. In 1995,

UNDP supported National Environmental Management Action Plan was

primed and in the same year Bangladesh Environmental Conversion Act 1995

wad promulgated. Under this Act, establishing new industries, environmental

clearance certificate from the Department of Environment and the companies

may be asked to disclose Environmental information as and when required


and Muttakin; 2005). In addition to this, country‟s En influenced by some other

legal/professional laws which are given below in table 1.

Table 1: Legal Status of Environmental Reporting in Bangladesh

1 Ministry for Forest and Environment

2 Department of Forest

3 Department of Environment

4 Planning Commission

5 Bank Companies Act 1991

6 National Environment Policy, 1992

7 Financial Institutions Act 1993

8 Securities and Exchange Commission Act 1993

9 Financial Institutions Act, 1993

10 Companies Act 1994

11 National Environmental Management Action Plan, 1995

12 Environmental Conversion Act, 1995

13 Environmental Conversion Rules, 1997

14 Bankruptcy Act 1997

15 Ozone Depleting Substances Rules, 2004

16 Environmental Court Act, 2010

17 Climate Change Trust Act 2010

18 Credit Risk Management Industry Best Practices by Bangladesh Bank in 2010

19 Environmental Risk Management Guidelines, 2011

20 Policy Guidelines for Green Banking, 2011

21 Bangladesh Biodiversity Act, 2012

22 Securities and Exchange Rules

23 Bangladesh Bank Rules

24 Tax Ordinances

25 IFIC guidelines

26 IASC guidelines
27 FASB guidelines

28 BFRS guidelines

From the above table, we can say there are strong legal positions of environmental

reporting in Bangladesh because disclosure of environmental information to the regulatory

body is required. According to Bangladesh bank guide line of green reporting, it is

mandatory to disclose environmental information in their annual report. Bangladesh bank

is playing a vital role in preparing and implementing environmental reporting in

Bangladesh (Bangladesh, 2012).

Environmental Protections Activities Taken by the Banks:

Table 2: Environmental Activities of the Sample Bank.

Name of Bank Major Environmental Protective Functions

Islami Bank Bangladesh Ltd. ETP, Bio-gas plant, Solar Home System, Solar Panel trades,
Bio- ertilizer plant, Tunnel Kiln, Installation of Zigzag kiln,
Waste and hazardous disposal plant, Waste paper recycling
plant, Waste attery recycling plant, Financing of LED bulb
production, Safe/Clean Water Supply Projects, Improved
cooking stove (Bandhu Chula), Green finance at zero rate of
return, Electricity Generation from Rice Husk, Rice bran Oil
Production, Tree Plantation, setting up of tube wells and
sanitary latrines, Blanket distribution, Flood Relief, Prime
Minister‟s Relief Fund, to reduce carbon footprints, Bank is
increasingly focusing on online platforms like Face book,
Websites etc. for promotional activities. ATM Debit Card,
Visa Debit Card, M-cash, i-banking, i-recharge, Remittance
card, SWIFT, Call center, Online banking, SMS banking,
Electronic access and retrieval, Electronic form, Email, SMS,
Video Conference, Centralized Trade Processing,
Centralized Investment Proposal Processing System, Waste
Management, Energy Management, Water Management,
Paper Consumption, Renewable Energy, Green Travel,
Ethical Banking
Al-Arafah Islami Bank Ltd. Tree plantation, ETP, HHK & Zigzag technology, Solar
panel, Introduces "Green Office Guide" for In-house
Environmental Management.
First Security Islami Bank Blankets distribution, Prime minister relief fund, Disaster
Ltd. Management.
Brack Bank Ltd. Paperless banking, Solar energy, Green financing, Climate
risk fund, Marketing and training & capacity building, ETP,
Solar Panels, Double hull oil tanker, Environment friendly
brick fields.
EXIM Bank Ltd. ETP, Renewable energy project, Clean water supply project,
Wastewater treatment plant, Recycle of harmful wastes, Solid
& hazardous waste disposal plant, Bio-gas plant, Bio-
fertilizer plant, Environment friendly brickfield.
Bank Asia Ltd. Energy Consumption, Solar powered branches, Financing
renewable energy and carbon offset projects, Reducing
Energy & Resource Consumption, Solar Home Systems,
Consumption of water, Solar energy, Bio- gas, and ETP,
HHK, Greenhouse Gas Emission, Waste Management,
Online Banking.
Prime Bank Ltd. ETP, HHK projects, Solid waste management, Energy &
water management, Paper Consumption Management,
Renewable Energy Usage, Green Travel, Online Banking and
Internet Banking facilities, Green marketing.
South East Bank Ltd. Bio gas, Solar panel, HHFK, Mobile banking, Internet
Dutch Bangla Bank Ltd. Disaster management, Energy Management, Online Banking,
Mobile Banking, ETP, Bio Fertilizer.
Jamuna bank Ltd. Energy Management, Online banking, Internet Banking,
Mobile / SMS banking, Green Marketing.
Mercantile Bank Ltd. Solar Home System, HHK/Tunnel Kiln/Equivalent Improve
Brick Kiln, Energy Management.

From the table it is clear that our banking companies are trying their best to protect our
environment. Most of the banks are covering some environmental protective activities that
are very satisfactory. Islamic bank Bangladesh is clearly ahead among the sample banks. All
of the sample banks provide environmental performance report according to Bangladesh bank
direction. According to Bangladesh bank guidelines there are forty seven (47) products line
under eleven(11) categories to share Bank, a bank 2015).
Environmental Protections Activities Taken by the Banks:
Table 3: Environmental Activities of the Sample Bank.

Year Disclosing Non-Disclosing Total Banks

Environmental Environmental
Information Information
2010 8 4 12
2011 11 1 12
2012 12 0 12
2013 12 0 12
2014 12 0 12
Total 55 5 60




60.00% Percentage of non disclosure

Percentage of disclosure



2010 2011 2012 2013

Figure 1: Environmental Information Disclosure.

From the table and figure, it can be said that disclosing environmental information in the

annual report of the selected banks are increasing from year to year. During the year 2010

and 2011, 66.67% and 91.67% banks respectively disclosed at least one environment related

information in their annual report. But there is a dramatic change from the year 2012 to

2014. All sampled banks disclosed several environmental information and activities in their

annual report. Last three years trend of disclosing environmental information of banking

companies is satisfactory and 100% in nature. During the period of study on average 92%

banks disclosed environmental information.

Environmental Information Status:

Table 4: Mode of Disclosing Environmental Information.

Year Qualitative Total Quantitative Total

Information Banks Information Banks
2010 8 12 0 12
2011 11 12 6 12
2012 12 12 8 12
2013 12 12 11 12
2014 12 12 11 12

12 12
12 11 11

8 8

2010 2011 2012 2013

Qualitative Information Quantitative Information

Figure 2: Mode of Disclosing Information.

Table 4 and figure 2, describes mode of disclosing environmental information of the selected

banks. It shows that the common practice followed by the banking companies regarding

environmental disclosure is to offer qualitative information in the annual reports. The trend of

disclosing qualitative information is increasing over time. During the period 2012 to 2014, all

banks provide qualitative information. On the other hand, disclosing of quantitative

information is also increasing in nature. In the period of 2010, not a single bank discloses any

quantitative information of environment but from the period of 2011, it is gradually

increasing. In 2014 most of the banks (eleven) disclose quantitative information. But the
banking companies that disclose financial information on environmental issues do not

provide any system wise break up of environmental expenditure or its accounting treatment

in the annual reports. However some banks have given detailed information on environmental

protection activities through charts and tables. Moreover, majority of banks disclose both

qualitative/descriptive and quantitative/monetary information on the environment in the

annual report and the trend is increasing rapidly. But the banks have started reporting

quantitative/monetary information in the annual report which is generally brief and

inadequate in understanding. However, there is a little consistency in this kind of disclosing

environmental information.

Table 5: Place of Environmental Information in the Annual Report.

Year Table Chairm Direct Finan Separate Notes Mission Vision

of an’s or’s cial Section and Stateme Stateme
Conte Massage Massa State Explanati nt nt
nt ge ments ons

2010 0 6 6 0 1 0 0 1
2011 3 4 7 0 7 0 0 1
2012 4 8 5 0 10 1 0 1
2013 8 8 7 0 11 1 0 1
2014 8 7 8 0 11 1 0 1
Annual Report


35% 2010
17% 2011


Figure 3: Place of Information.

The environmental information can be disclosed at various places/locations in the annual

report like the table of contents, financial statements, and separate sections, chairman and
directors message. From the table 5 and figure 3, we found that most of the companies make
environmental disclosures in the table of co report only. Moreover some banks report this
information in every year through separate environmental sections in the annual report. The
main purpose of reporting is to provide detailed information on the issue as well as to
highlight the organizations commitment towards environmental protections. Unfortunately
not a single bank has disclosed environmental information in the financial statements to serve
the main purposes of reporting. Only one bank has provided some environmental information
on its footnotes in the annual report in the year 2012 to 2014. Some banking companies use
other locations also for environmental disclosure like first page of the annual report, vision
statement and booklets attached with the annual reports. However every bank has mission
statement but there is not a single word for environment. On the other hand, year to year
analysis shows the year from 2012 to 2014 the most participating years to disclose
environmental information in the different places of annual report.