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ACCA Occasional Research Paper No. 29

Jones and Matthews 2000

Executive summary

Environmental concern occupies centre stage as we enter the new Millennium. Environmental accounting reflects this environmental concern. So far, however, most environmental accounting studies have been descriptive or purely theoretical. There is a need to try to operationalise environmental accounting. Building a practical framework is the concern of this particular research report.

The three main objectives of the research report are:

1. 1. to outline a potential environmental reporting paradigm
   
   
2. 2. to show the feasability of the paradigm when applied by a major UK company
   
   and
   
   
3. 3. to encourage discussion and experimentation by companies in the environmental reporting domain.

The research applies a method of recording and valuing habitats, flora, and fauna to the Elan Valley Nature Reserve, owned by UK company, Hyder plc. The research shows that it is feasible to show corporate stewardship of natural assets. The model presents:

• the types of habitat, their critical status and ecological grading
  
  
• the number of critical species
  
  
• the total number of species
  
  and
  
  
• different valuation methods. The model used is shown to be feasible and now needs to be field tested on other organisations.
  
  

Introduction

In the 1990s, environmental accounting, mirroring environmental concern, has flourished. In the main, however, environmental accounting has focused on building a theoretical framework (see, for example, Gray 1992) or on conducting empirical studies that seek to describe and explain environmental accounting in terms of corporate or organisational characteristics (see, for example, Harte and Owen, 1992; Deegan and Gordon, 1996). These studies provide a good framework within which environmental accounting can be located and understood. They do not, however, attempt to provide an operational and practical framework for environmental accounting.

This monograph seeks to develop the debate and provides one possible environmental reporting paradigm. This environmental reporting model is not meant to be exclusive or exhaustive, denying other models. The focus of the proposed model is centred around the concept of a natural inventory. Organisations are encouraged to test and adopt the proposed model which is applied to the Elan Valley Nature Reserve, owned by a large UK listed company, Hyder plc (a utility company specialising in water and electricity).

The main objectives of this paper are:

1. 1. to outline a potential environmental reporting paradigm
   
   
2. 2. to show the feasibility of the paradigm when applied by a major UK company
   
   and
   
   
3. 3. to encourage discussion and experimentation by companies in the environmental reporting domain.

The remainder of the monograph is structured as follows. Chapter 2 outlines the motivation for the proposed model and sets out its main components (i.e., hierarchical reporting of habitats, flora and fauna). The following two chapters then apply the model to the Elan Valley Estate owned by Hyder plc. Chapter 3 explains the nature of the estate and the main methodology used in the study, while chapter 4 demonstrates the results of applying the model. Finally, chapter 5 concludes the report and calls for further research.

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