A framework for environmental reporting through financial statements

Since the 1990’s there have been several proposals worldwide concerning environmental reporting, but few of them are related to environmental reporting through financial statements. Nowadays there is still a need for a proposal that encompasses key environmental concepts, underlying principles, qualitative characteristics, and the specific regulatory treatment of environmental costs and liabilities for reporting through annual financial statements. Recently, the Federation of European Accounting Experts (FEE) has made a proposal for a comprehensive conceptual framework (underlying principles and qualitative characteristics) for environmental reporting, while the United Nations Division for Sustainable Development has proposed the use of specific environmental management accounting (EMA) tools for internal and external accounting recognition of environmental costs and revenues. Furthermore, the Commission of European Communities has made a recommendation for the regulatory treatment (recognition, measurement and disclosure) of environmental costs and liabilities through financial statements. In this work, one links the three previous proposals in order to propose a comprehensive process for environmental reporting through financial statements.