How Should a ‘Sustainable Corporation’ Account for Natural Capital?

Barker, Richard and Mayer, Colin (2017) How Should a ‘Sustainable Corporation’ Account for Natural Capital? Saïd Business School Working Paper 2017-15.

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Abstract

Corporate activity promotes economic growth. This has obvious benefits for society, yet by placing unsustainable demands on natural resources, it also poses serious problems. Part of the response to this should be clarity over corporate responsibility and accountability towards the environment, including in regard to the design and implementation of an appropriate system of accounting. In this paper we propose a reinterpretation of financial accounting in which it is argued that existing systems should not be viewed as independent of natural capital accounting; instead, financial accounting should be extended to record profit as a surplus with respect to financial capital once physical capital maintenance of (critical) natural capital has been recorded. Such an approach draws a clean distinction between stocks and flows that are financially and sustainability relevant, while incorporating both within an integrated accounting system. This mitigates the tension that conventionally exists between corporate responsibility towards shareholders and stakeholders.

Item Type: Oxford Saïd Research Paper
Subject(s): Accounting
Date Deposited: 20 Sep 2017 11:59
Last Modified: 20 Sep 2017 11:59
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6545

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