Green Accounting is a new type of accounting that attempts to factor environmental costs into the financial results of operations. It has been argued that the gross domestic product ignores the environment which is why policymakers need a revised model that supports green accounting. 

The Green accounting term was used by economist and professor Peter Wood. The major purpose of green accounting is to help businesses understand the potential advantage between traditional economic goals and environmental goals.

What are the objectives of green accounting? 

The objectives of green accounting are: 

1. To identify that part of the gross domestic product that reflects the costs that are necessary to compensate for the negative impacts of economic growth. 

2. To establish the link between physical resource accounts with monetary environmental accounts. 

3. To evaluate the environmental costs and benefits 

4. To account for the maintenance of tangible resources. 

5. To elaborate and measurement of indicators of environmentally adjusted products and income. 

What is the significance of Green Accounting? 

Green Accounting is very important because the negative changes in the environment are also affecting the economy on the whole. That is why it is important the gross domestic product of a country can be affected by climatic change. Green accounting helps in pollution control and it plays a vital role in sustainable development. It also helps in testing and reporting the performance of environmental activities. 

Green accounting has become necessary for companies to formulate the methods of green causes for the future. With the help of Green accounting, the pollution limits will be decided. Even though there are many limitations to implementing green accounting but there are many advantages to it.

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