Green Accounting in Indian Corporates Emerging Challenges and Policy Directions

Abstract

The increasing intensity of environmental degradation, climate change risks, and regulatory pressures has compelled businesses to reconsider the traditional scope of financial reporting. Conventional accounting systems primarily capture financial transactions and profitability, often excluding environmental costs and ecological consequences associated with corporate activities. Green Accounting, also referred to as Environmental Accounting, seeks to integrate environmental costs, liabilities, and sustainability considerations into accounting systems. This paper critically examines the conceptual foundations, regulatory background, need, current practices, and implementation challenges of Green Accounting in Indian corporates. The study is analytical and descriptive in nature and is based on secondary data derived from sustainability reports, regulatory frameworks, and scholarly literature. The findings suggest that although environmental disclosure practices have improved—particularly after the introduction of sustainability reporting requirements by the Securities and Exchange Board of India—systematic integration of environmental costs into mainstream financial accounting remains limited. The absence of standardized valuation models, implementation costs, and technical expertise continues to restrict full adoption. The paper concludes that Green Accounting is essential for long-term sustainable growth and requires stronger regulatory enforcement and professional capacity building in India.