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Environment has become a crucial concern in today' s ecological, social and economical set up. Retention and improvement of the quality of environment is a big issue for the business world. The business houses are hold responsible for ensuring a sustainable environment as their activities exerts tension over the environmental structure.
Environmental accounting (EA), more specifically, environmental management accounting (EMA) has emerged during the last two decades in response to this issue. Review of available literature and corporate practices reveal that a range of different perception and conception of EMA has been developed. However, recently, there has been a movement towards a common understanding of the term EMA (Schaltegger and Burrit, 2000). Disclosure of environmental information in corporate annual reports begins in the 1970s and it had sharply expanded in the 1990s (Kukobo et al, 2002). Before 90's there were no evidence that public limited companies listed with Dhaka Stoke Exchange (DSE) disclosed environmental information in their annual reports. Evidence was found from Belal's (1997) study that only 6% publicly traded companies made environmental disclosure (Islam, 2002). Since corporate reporting practices are still non-voluntary for a developing country like Bangladesh, public awareness about environmental disclosure in corporate reporting remains untouched.
This thesis deals with a very specific objective. It focuses on whether listed companies in Dhaka Stock Exchanges (DSE) disclose environment related information and then we have tried to identify some explanation from the present disclosure practices. For the very reason, we have had a thorough review of the disclosure practices followed by the listed companies. In this case we have given importance on descriptive statistics though there are a lot of such studies like Belal (1997, 1999), Imam (1999, 2000) etc. There are also a lot of statistically significant test in this area like index rating of Wiseman (1982) that was also adopted by Cormier and Magnan (1999, 2001). Such a method is good for the analysis of an annual report (Kokubu et al., 2002). There are also many methods to measure environmental disclosure in terms of the quality of the report (Grey et al., 1995;Milne and Adler, 1999 and Kokubu et al., 2002). But, as our companies disclose no or use these advanced statistical tools. minimum information regarding environment, we think that the time hasn't come yet to use these advanced statistical tools.
We have divided our total discussion into three sections. In the first section, we have tried to define environ mental accounting to some extent so that our readers have, at least, some theoretical conception over the issue we are talking about. In the second section, we have developed the hypotheses to be tested and we have tested it on the basis of empirical data, followed by the logics of the results and its implication in the last section.
Environmental Accounting Defined
EA is a broad term that is used in different contexts with different meanings and
application. EMA has a focus on providing the management of an organisation with better
information on the actual private environmental costs already being incurred by the entity. Other directions being taken with corporate environmental accounting place greater emphasis on the external reporting of environmental expenditures, and estimating the external environmental costs not recognised by the entity (external cost accounting). With external cost accounting, the estimation of external costs can be used to determine the profit that would remain if a provision or expenditure had been made to restore or avoid the external environmental impacts. EA refers to the incorporation of environmental costs and information into a variety of accounting practices. Figure 1 below depicts some of the different contexts in which EA is used. At a macroeconomic level, EA is used to account for costs associated with a region's stocks and flows of natural resources. EA accounts for the flow of renewable and - renewable resources through a region (natural resource accounting) or the flow of goods and services through an economy (national income accounting) in such a level.
At the microeconomic level, EA can be applied to both financial accounting and management accounting. Financial accounting, whereby a firm reports its economic activities to an external audience, has requirements for disclosure of environmental liabilities and certain environmental costs. In terms of management (or internal) accounting, EA is the way that businesses can account for the material use and environmental costs of their operations. Materials accounting is a means of introduction of tracking material flows through a facility in order to characterize inputs and outputs for the purposes of evaluating both resource efficiency and environmental improvement opportunities.
Environmental Costs Classified
"Social costs" are the costs that the society bears due to the adverse effects on the environment associated with business activities and include those to clean polluted rivers, those associated with damage to humankind and ecosystems from air pollutant emissions, and other costs; because there is no way to identify who is responsible for these costs. The social costs are borne by the society as external economic loss, as opposed to the costs normally borne by companies. Since development of rigorous tackling on environmental conservation by company's results in reduction of social costs, such tackling should be encouraged. Companies may incur some costs to conserve the environment from being polluted or contaminated as a part of their social responsibility and accountability. Environmental conservation includes the following activities:
Conservation of the environment from the conditions that cause adverse effects on human health and the living environment through air pollution, water pollution, soil contamination, noise, vibration, ground subsidence, and offensive odors that are generated by business activities by companies, etc. (Pollution prevention)
Conservation of the environment from the conditions that cause adverse effects on the global environment overall or over a wide range through global warming, progressing ozone layer depletion, marine pollution, and biodiversity that are generated by business activities by companies, etc. (global environmental conservation)
Conservation of the environment by reduction of the use of chemical materials that may pollute the environment, control of waste production, reuse of products, promotion of recycling at various levels, and other appropriate waste processing (resource circulation).
Other environmental conservation implemented by companies (other environmental conservation activities). Environmental costs refer to the "investment amount and expense amount for environmental conservation" by way of implementing the above mentioned activities. On the basis of expenditure, environmental costs are classified into the following five categories:
Environmental cost for controlling the environmental impacts that are caused within a business area by production and service activities (Abbreviated as business area cost)
Environmental cost for controlling environmental impacts that are caused in the upstream or downstream as a result of production and service activities (Abbreviated as upstream-downstream cost)
Environmental cost in management activities (Abbreviated as management activity cost)
Environmental cost in research and development activities (Abbreviated as research and development cost).
Environmental cost in social activities (Abbreviated as social activity cost). Another category is added as a result of the cause unrelated to these business activity areas.
Environmental costs corresponding to environmental damages (Abbreviated as environmental damage cost).