Sustainability Accounting for Externalities

Abstract

As companies' impacts on society receive increasing attention, higher expectations are placed on accounting systems to consider effects on internal and external stakeholders. With a broader sustainability perspective, impacts of external effects caused by companies' operations are made visible in financial reports. This article argues that externalities should be recognized in financial reports and proposes ways to extend traditional balance sheets and income statements with information on companies' environmental, social, and economic impacts on society.