The goal of environmental accounting is to assist in creating sustainable or 'green' development through the pursuit of more efficient environmental conservation practices and standards. This type of accountant is primarily responsible for making an effort to find financially viable ways to limit or completely eliminate a company’s environmental impact through use of policy, technology, skills or knowledge improvement and training of staff in combination with human resources, as well as to develop a restoration plan if an environmental issues, such as unintended pollution, do occur. The work performed by environmental accountants studies the finances of companies and firms to allow them to identify how expensive their key conservation procedures are, as well as the financial impact and non-fiscal related impacts and benefits gained from establishing or continuing them. Additionally, environmental accountants monitor and report on the environmental cost and financial results of these practices.
While environment-related expenses are sometimes lumped in with the rest of a company’s overhead, tracking the cost of meeting legal regulations, producing or utilizing certain products, and following established business practices and policies can result in significant savings for a company's bottom line. This is because environmental accounting paints a clear picture of a business’s ecological sustainability practices from every angle so that company executives can make better and more informed business decisions that will ultimately save money and reduce negative environmental consequences.
Areas of Specialty for Environmental Accountants
While specific environmental accounting positions may vary greatly, they generally fall into one of the three following categories:
- Financial Accounting
This type of environmental accounting may be performed by a financial analyst and typically deals with external business reporting, including reporting to the Environmental Protection Agency (EPA) on sustainability practices and environmental cost for a project. This may be called 'sustainability reporting'. Individuals in financial accounting positions will often generate quarterly and annual reports, like earning statements, for publicly held corporations using generally accepted accounting principles (GAAP). The collected information can then be utilized by investors, lenders, governing bodies, and other interested parties. These reports require knowledge of specialized accounting and reporting practices and will provide valuable insight into the company’s environmental liabilities on specific environmental issues and future raw material expenses. These specialists most often work in the office of larger corporations.
- Managerial Accounting
Managerial or management accounting dealing with environmental cost is the process of using approved accounting procedures to collect, analyze, and internally report environmentally relevant company information. The collection process may include acquiring data on environmental regulation costs, production levels, and inventory costs to assist with the following:
- Planning for business success, including an environmental audit when a new project oe engineering for a new product begins
- Identifying areas that need managerial attention or risk management assessment
- Informing purchasing, investments, product design, product production, reducing waste, data analysis, and compliance strategy decisions
- Regulating behavior and accounting practices to improve company results and profits
- May include the use of an environmental management system if sustainability accounting is a common need in the industry
While this position utilizes generally accepted accounting principles, sustainability accounting in this context uses practices and systems that tailor specifically to the corporation’s needs, financial trends, renewable practices, and the bigger picture around the product or service it provides. These systems can range from extremely simple to quite complicated, but the goal is always the same: provide valuable information intended to assist company management in making decisions about purchasing, investments, product cost, product pricing, design, and strategies for environmental compliance.
- National Income Accounting
Environmental accounting is also conducted by government agencies. This is known best as national income accounting, but is sometimes referred to as natural resources accounting. This type of work involves calculating the Gross Domestic Product (GDP). The GDP is a measurement that indicates the country’s value in services and natural resources (timber, oil, etc.), including depreciation of each category of resource, and is generally considered an indication of the country’s economic health. National income accountants use physical and financial numbers to report on the consumption of the nation’s renewable and nonrenewable natural resources. You'll need a general accounting degree and may want to look for a focus in sustainability accounting skills if you are looking to get into one of these accounting jobs. You'll also need excellent communication skills, analytical skills, be comfortable working with a computer, and may want to return to a university or other school or program to complete your learning with a special certification to help you with your environmental accounting duties. Even a focus in accounting for non profit organizations may help you get into a government position.
What do Environmental Accountants Do?
Most commonly, environmental accounting refers to the practice of calculating the financial value and environmental costs and savings associated with various business decisions in order to save the company money and keep them from being subject to regulations enforcement. Ultimately, environmental accountants must be experts in general financial or cost accounting and the related field of sustainability. This is because they must continually combine traditional accounting skills with environmental management and conservation principles to better analyze cost-to-benefit ratios. They work to identify and track both fiscal and physical environmental cost and then present their findings to those in managerial positions. Additionally, environmental accountants are often responsible for maintaining positive relations with the community at large, helping the company's media image in terms of how people view their influence on the world. Those people who have high interest in sustainability want to see companies making this a main point in their outreach on social media and elsewhere on the web, especially in the energy sector.
The functions of an environmental accountant can usually be divided into two categories: internal and external.
Internal functions are generally for the company’s benefit. The work performed by the environmental accountant in this capacity isn’t intended for the general public. Instead, the assessments, research results, and recommendations regarding environmental conservation are presented to company officials. This allows management to better understand the cost of the business’s environmental conservation efforts in relation to the benefits gained from such practices. These internal activities help promote more effective and efficient decision-making. A company may hire their own internal accountant with the proper accounting skills to work on this, or they may hire an accounting firm.
External functions, on the other hand, encompass tasks related to information collection and presentation outside of the corporation. Often, this includes disclosing environmental conservation results to stakeholders like investors, customers, and community members. The work performed in this capacity relates most to providing the world with information about the company’s environmental activities. The information shared doesn’t pertain solely to data reporting, however. Environmental accountants are also responsible for sharing the company’s position on environmental conservation through a website or elsewhere in cooperation with a marketing team, which facilitates a greater level of trust among the public.
Because environmental accountants must complete both internal and external tasks, and their job can fall under financial or cost accounting, managerial accounting, or national income accounting, they often have a wide range of responsibilities. While these can vary greatly, here are several common duties environmental accountants are expected to perform:
- Research, compare, and recommend the very best environmental practices
- Identify environmental opportunities and evaluate potential costs and benefits
- Monitor environmental procedures and report any observed changes
- Stay informed regarding local, state, and national environmental laws and regulations
- Report on the costs associated with ecological projects
- Assist in designing an environmentally-friendly manufacturing process for goods and, or services offered
- Create and manage environmental information systems
- Oversee accounting tasks, such as purchasing, investing, and establishing product/service pricing
- Identify environmental opportunities that bring in additional profits
- Take note of and report potential environmental liabilities
- Predict future financial expenses and gains based on environmental information system implementation
- Consult with companies, professionals, and researchers about environmental impacts
- Provide honest, unbiased, and relevant environmental information to individuals within and outside of the company
- Learn and analyze both ecological and financial trends and cycles
- Explain how environmental trends and events can impact company futures
- Explain how financial trends and events can impact company futures
- Communicate openly with stakeholders about environmental conditions and overall financial performance
- Discuss environmental standings and procedures with potential investors and lenders
- Assess company tasks and strategies and then assign their financial value for more accurate reporting
- Stay up-to-date with environmental accounting best practices
- Establish protocols for use during certain environmental scenarios
- Perform basic accounting tasks
While environmental accountants work for a particular company, they have a responsibility to be reliable. Providing inaccurate or biased information is counterintuitive to establishing a good relationship with company stakeholders.
Data must be presented:
- Accurately and faithfully so that interested parties can easily verify it
- Completely, to include anything of corporate or public significance
- Thoroughly and in a manner that honestly depicts environmental findings
- Prudently, especially in cases where information may be perceived as vague or unclear
- Neutrally and impartially without intentionally encouraging a particular perspective
Education Requirements to Become an Environmental Accountant
At minimum, accountants must attain a bachelor’s degree in accounting. Programs will vary but generally consist of 120 credit hours of accounting, business, and elective courses.
The curriculum may include any of the following classes:
- Accounting Communications
- Strategic Cost Analysis
- Individual Income Taxation
- Advanced Accounting
- Cost and Managerial Accounting
- Business Law
- International Accounting
- International Taxation
- Quantitative Application in Business
- Analysis of Corporate Financial Statements
- Tax Preparation and/or Research and Analysis
Unfortunately, most colleges and universities do not offer undergraduate or graduate-level concentrations in environmental accounting. Taking additional courses in economics, environmental science, and other related topics, however, is often helpful for those who intend to pursue environmental accounting as a career. If you know that you are interested in this type of position, you could go the extra mile and complete a graduate level college education with the required coursework to earn a degree in environmental accounting.
What Certifications are Required?
Depending on the company and job title, candidates may be required to be licensed as a Certified Public Accountant (CPA).
While state requirements vary, most CPAs must complete the following:
- Successfully complete 150 semester hours of education in accounting and business, which generally equates a master’s degree in the field
- Pay any required application, service, and, or examination fees
- Pass the Uniform CPA Examination
- Work professionally for at least one year under the supervision of a licensed CPA
- Pass an ethics examination
- Submit any necessary documentation and application materials
Additionally, many individuals interested in becoming an environmental accountant seek to be licensed as a Certified Environmental Auditor (CEA). Accountants with this designation are approved by the National Registry of Environmental Professionals to conduct environmental compliance and risk audits of company operating facilities, equipment, and procedures.
CEA candidates must complete the following:
- Acquire a bachelor’s degree in a discipline related to the environment (professional work experience can be substituted for some or all of this degree)
- Work professional for at least four years in a job that is directly involved with environmental audits
- Pay any required application, service, and, or examination fees
- Pass the Certified Environmental Auditor Exam
Careers Outlook for Environmental Accountants
While the Bureau of Labor Statistics Occupational Outlook Handbook doesn’t specifically mention environmental accountants, it does state that accountants and auditors, in general, can expect to see employment growth of 7 percent before 2030. For comparison purposes, this is significantly faster than any other occupation. That makes accounting a very stable and promising career option. Healthier economic conditions, more complex financial regulations, and business globalization likely account for most of the projected job growth in this field. Of course, individuals who have completed higher levels of education and have earned additional certifications will be at an advantage as the accounting job market grows.
Additionally, accounting and auditing job availability differs depending on location. For example, employment opportunities in South Carolina, Alabama, Minnesota, Kansas, Arizona, Missouri, Indiana, Oklahoma, Washington, and Tennessee were over twice as plentiful as those in Alaska, Idaho, Montana, Wyoming, North Dakota, and South Dakota.
The states with the highest employment rate for accountants and auditors in 2020 were:
- New York
- New Jersey
- North Carolina
Additionally, The Bureau of Labor Statistics reported that most accountants and auditors hold full-time positions. While only one out of five individuals in the field regularly work more than 40 hours a week, overtime can become more commonplace during tax season.
It’s important to realize that not every company actually utilizes or has a need for environmental accountants. This is, however, on course to change as more and more corporations turn their focus on sustainability. As the public demand for more environmentally-friendly corporate dealings persists, businesses will become even more interested in lowering their carbon footprints. Environmental accounting positions are particularly common with companies who often deal with environmental protection agencies.
Employment opportunities include, but are not limited to:
- Power Companies
- Oil Companies
- Paper Manufacturers
- Chemical Manufacturers
- Automobile Companies
- Government Agencies
- Non-Profit Organizations
- Large Corporations
- Colleges and Universities
As society continues to place emphasis on the environment and the importance of opting for sustainable practices, businesses will become increasingly interested in employing environmental accountants. Overall, the field is secure and job prospects are on course to improve steadily over the next several years.
In the year 2020, accountants and auditors made a median annual salary of $73,560 according to the Bureau of Labor Statistics Occupational Outlook Handbook. Even the bottom 10 percent of accountants and auditors in the United States earned a yearly median salary of $45,220. Top-tier accountants and auditors in the top 10 perfect, however, earned yearly wages in excess of $128,680.
As with any profession, salaries vary drastically depending on the type of position, the tasks performed, academic history, and additional professional certifications. Those with higher and more prestigious qualifications will be more likely to have higher-level positions that will provide increased annual take home pay. Additionally, accounting wages differ depending on location.
The states with the highest annual mean wage, ranging between $78,640 and $101,440, for accountants and auditors in 2020 were:
- New York
- Road Island
- New Jersey
Mean Accountant/Auditor Salaries:
- South Carolina: $68,520
- Mississippi: $66,450
- Kentucky: $70,710
- Kansas: $70,030
- South Dakota: $69,170
- North Dakota: $66,060
- Montana: $68,560
- Idaho: $72,190
- Nevada: $68,360
- Washington: $83,720
- Utah: $68,590
- Missouri: $71,130
- Minnesota: $76,130
- Oklahoma: $75,280
- Michigan: $77,160
- Ohio: $74,460
- Pennsylvania: $77,810
- North Carolina: $80,570
- Georgia: $83,370
- Florida: $74,960