CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Every business has an overriding responsibility to make the fullest possible use of its resources both human and material. An enterprise is a corporate citizen. . Like a citizen, it is esteemed’ and judged by its actions in relation to the community of which it is a member as well as by its economic performance. The corporate sectors in Nigeria has not been performing as a good citizen that is why there are so many laws that have been laid down and further amended from time to time as when required to bound the corporate sector to fulfil their social responsibility for better development. Chauchan (2005), stated that “Responsibility towards environment has become one of the most crucial areas of social responsibility. Recent years have witnessed concern for environmental degradation, which is ‘taking place mainly in the form of pollution of various types, viz, air, water, sound, soil erosion, deforestation, etc. It is a worldwide phenomenon. It spoils human health, reduces economic productivity and leads to loss of amenities (Chauchan 2005:720).
The concept of environmental accounting is an emerging and dynamic one. It is also a fruitful attempt to identify and bring to the light of the resources exhausted and cost rendered reciprocally to the environmental. Bartolomeo, et al (2000), described environmental information of interest to the public and to the financial community. Internal use is better termed Environmental Management Accounting (Bartolomeo et al, 2000:31). Environmental accounting is an expansion path. With increasing social focus on the environment, accounting fills an expectation role to measure performance. The status of environmental awareness provides dynamic for business reporting its environmental performance. Environmental accounting is described as involving the identification, measurement and allocation of environmental costs, the integration of these costs into business, identifying environmental liabilities, if any, and finally communicating this information to the company’s stakeholders on a part .of general purpose financial statements (Pramanik, Shil and Das, 2007: 18). In many countries, environmental accounting is taken to mean the identification and reporting of environment specific cost such as liability cost and waste disposal costs. It is accounting for any costs and benefits that arise from change to a firm’s products and processes where the change also involves a change in environmental impact (Chauchan, 2005:720). Environmental accounting needs to work as a tool to measure the economic efficiency of environmental conversations activities and the environmental efficiency of the business activities of company on a whole.
In this sense, it is comprehensive approach to ensure governance that includes transparency in its societal activities. It is seen as by corporate managers and environmental advocates alike as a necessary complement to improve environmental decision making within the private sector. From a public perspective, poor environmental accounting means that the private sector is likely to miss investment and predict design opportunities that have ‘financial and environmental benefits. It is widely believed that environmental accounting practices, working in organization with the private sector’s own profit motive will crease significant environmental benefits. However, environmental accounting is a broader term and more expansive when compare to the traditional accounting paradigm in that it allows the taking of corrective management action to reduce environmental impacts and cost plans, where appropriate, the external reporting of the environmental and financial benefits in verified corporate environmental reports or published annual reports, thus serving as a vital tool to assist management of our environmental risks and operational costs and for understanding the role played by the natural environment in the economy.