Corporate environmental accounting and reporting is almost two decades-old now. Environmental accounting provides a common framework for organizations to identify and account for past, present and future environmental costs, in order to support management decision-making, control and public disclosure. And also environmental reporting consolidates and compiles the environmental performance status of an organization. Thus, accounting and reporting for the environment has become increasingly relevant to companies in this millennium.

In recent years, there has been a trend in many public corporations, to provide more information on environmental matters both within the management accounting system and in the annual report. This is in response to increased concern by the stakeholders and public awareness of environmental Issues. These factors have put pressure on listed corporations to measure environmental costs and expenses and to develop and enhance environmental disclosure to different stakeholder groups. However, the approach to quantity and quality of environmental information accounted for and reported has varied from inactive to proactive.

Early efforts on environmental accounting were mainly evolved due to the deficiency of national economic accounts in measuring the environmental degradation. Gross Domestic Product (GDP) could increase with environmental degradation, say, due to clean up an oil spill or to increased health expenditures necessitated by poor air quality, or a clear-cut in a tropical rainforest area (DOE 1991). In these three cases, GDP would register the cost of clean-up effort, the increased health expenditures and the timber harvest as contributing to economic growth (as they reflect market transactions), but would not account for the cost of environmental degradation. Hence, the main purpose of environmental accounting system is its ability to assist in understanding and management of the potential trade-off between conventional economic development objectives and environmental goals as a tool of policy formulation (Peskin, 1990).

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