The goal of environmental accounting is to assist in creating sustainable development through the pursuit of more efficient environmental conservation practices. This type of accountant is primarily responsible for finding financially responsible ways to limit or completely eliminate a company’s environmental impact, as well as develop a restoration plan if an environmental disaster does occur. The work performed by environmental accountants allows companies to identify how expensive their conservation procedures are, as well as the financial and non-fiscal benefits gained from establishing or continuing them. Additionally, environmental accountants are responsible for continually measuring and reporting on the environmental and financial results of these practices.
While environment-related expenses are sometimes lumped in with the rest of a company’s overhead, tracking the cost of meeting regulations, producing or utilizing certain products, and following established procedures can result in significant savings. This is because environmental accounting paints a clear picture of a business’s ecological sustainability practices from every angle so that company executives can make better and more informed business decisions that will ultimately save money and reduce negative environmental impact.
Areas of Specialty
While specific environmental accounting positions may vary greatly, they generally fall into one of the three following categories:
This type of environmental accounting typically deals with external business reporting. Individuals in financial accounting positions will often generate quarterly and annual reports, like earning statements, for publicly held corporations using Generally Accepted Accounting Principles (GAAP). The collected information can then be utilized by investors, lenders, governing bodies, and other interested parties. These reports will provide valuable insight into the company’s environmental liabilities and future environmental material expenses.
Managerial accounting is the process of collecting, analyzing, and internally reporting environmentally relevant company information. The collection process may include acquiring data on environmental regulation costs, production levels, and inventory costs to assist with the following:
Whereas financial accounting utilizes GAAP, environmental accounting in this context uses practices and systems that tailor specifically to the corporation’s needs and the product or service it provides. These systems can range from extremely simple to quite complicated, but the goal is always the same: provide valuable information intended to assist company management in making decisions about purchasing, investments, product cost, product pricing, design, and strategies for environmental compliance.
National Income Accounting
Environmental accounting is also conducted by government agencies. Known best as national income accounting, but sometimes referred to as natural resources accounting, this type of work involves calculating the Gross Domestic Product (GDP). The GDP is a measurement that indicates the country’s flow services and natural resources (timber, oil, etc.) and is generally considered an indication of the country’s economic health. National income accountants use physical and financial numbers to report on the consumption of the nation’s renewable and nonrenewable natural resources.
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What Environmental Accountants Do
Most commonly, environmental accounting refers to the practice of calculating the financial and environmental costs and savings associated with various business decisions. Ultimately, environmental accountants must be experts in two fields: general financial accounting and sustainability. This is because they must continually combine traditional accounting methods with environmental management and conservation principles to better analyze cost-to-benefit ratios. They work to identify and track both fiscal and physical environmental costs and then present their findings to those in managerial positions. Additionally, environmental accountants are often responsible for maintaining a positive relationship with the community at large.
The functions of an environmental accountant can usually be divided into two categories: internal and external.
Internal functions are generally for the company’s benefit. The work performed by the environmental accountant in this capacity isn’t intended for the general public. Instead, the assessments, research results, and recommendations regarding environmental conservation are presented to company officials. This allows management to better understand the cost of the business’s environmental conservation efforts in relation to the benefits gained from such practices. These internal activities help promote more effective and efficient decision-making.
External functions, on the other hand, encompass tasks related to information collection and presentation outside of the corporation. Often, this includes disclosing environmental conservation results to stakeholders like investors, customers, and community members. The work performed in this capacity relates most to providing the world with information about the company’s environmental activities. The information shared doesn’t pertain solely to data reporting, however. Environmental accountants are also responsible for sharing the company’s position on environmental conservation, which facilitates a greater level of trust among the public.
Because environmental accountants must complete both internal and external tasks, and their job can fall under financial accounting, managerial accounting, or national income accounting, they often have a wide range of responsibilities. While these can vary greatly, here are several common duties environmental accountants are expected to perform:
While environmental accountants work for a particular company, they have a responsibility to be reliable. Providing inaccurate or biased information is counterintuitive to establishing a good relationship with company stakeholders. Data must be presented:
At minimum, accountants must attain a bachelor’s degree in accounting. Programs will vary but generally consist of 120 credit hours of accounting, business, and elective courses. The curriculum may include any of the following classes:
Unfortunately, most colleges and universities do not offer undergraduate or graduate-level concentrations in environmental accounting. Taking additional courses in economics, environmental science, and other related topics, however, is often helpful for those who intend to pursue environmental accounting as a career.
Depending on the company and job title, candidates may be required to be licensed as a Certified Public Accountant (CPA). While state requirements vary, most CPAs must complete the following:
Additionally, many individuals interested in becoming an environmental accountant seek to be licensed as a Certified Environmental Auditor (CEA). Accountants with this designation are approved by the National Registry of Environmental Professionals to conduct environmental compliance and risk audits of company operating facilities, equipment, and procedures. CEA candidates must complete the following:
While the Bureau of Labor Statistics Occupational Outlook Handbook doesn’t specifically mention environmental accountants, it does state that accountants and auditors, in general, can expect to see employment growth of 10 percent before 2026. For comparison purposes, this is significantly faster than any other occupation. That makes accounting a very stable and promising career option. Healthier economic conditions, more complex financial regulations, and business globalization likely account for most of the projected job growth in this field. Of course, individuals who have completed higher levels of education and have earned additional certifications will be at an advantage as the accounting job market grows.
Additionally, accounting and auditing job availability differs depending on location. For example, employment opportunities in South Carolina, Alabama, Minnesota, Kansas, Arizona, Missouri, Indiana, Oklahoma, Washington, and Tennessee were over twice as plentiful as those in Alaska, Idaho, Montana, Wyoming, North Dakota, and South Dakota.
The states with the highest employment rate for accountants and auditors in 2017 were:
Additionally, The Bureau of Labor Statistics reported that most accountants and auditors hold full-time positions. While only one out of five individuals in the field regularly work more than 40 hours a week, overtime can become more commonplace during tax season.
It’s important to realize that not every company actually utilizes or has a need for environmental accountants. This is, however, on course to change as more and more corporations turn their focus on sustainability. As the public demand for more environmentally-friendly corporate dealings persists, businesses will become even more interested in lowering their carbon footprints. Environmental accounting positions are particularly common with companies who often deal with environmental protection agencies. Employment opportunities include, but are not limited to:
As society continues to place emphasis on the environment and the importance of opting for sustainable practices, businesses will become increasingly interested in employing environmental accountants. Overall, the field is secure and job prospects are on course to improve steadily over the next several years.
In the year 2017, accountants and auditors made a median annual salary of $69,350 according to the Bureau of Labor Statistics Occupational Outlook Handbook. Even the bottom 10 percent of accountants and auditors in the United States earned a yearly median salary of $43,020. Top-tier accountants and auditors in the top 10 perfect, however, earned yearly wages in excess of $122,220.
As with any profession, salaries vary drastically depending on the type of position, the tasks performed, academic history, and additional professional certifications. Those with higher and more prestigious qualifications will be more likely to have higher-level positions that will provide increased annual take home pay.
Additionally, accounting wages differ depending on location. For example, the annual mean wage in South Carolina, Mississippi, Kentucky, Kansas, South Dakota, North Dakota, Montana, Idaho, and Nevada ranged from $36,560 to $65,840 in 2017. One the other hand, the states of Washington, Utah, Missouri, Minnesota, Oklahoma, Michigan, Ohio, Pennsylvania, North Carolina, Georgia, Vermont, New Hampshire, and Florida had an annual mean wage of $70,050 to $76,010 in 2017.
The states with the highest annual mean wage, ranging between $79,250 and $96,880, for accountants and auditors in 2017 were: