Research pick: Sustainable accounting - "Sustainable accounting information and its role in achieving the requirements of sustainable development and reducing costs"

A new study is challenging long-held assumptions about the role of accounting in business, suggesting that financial record-keeping could help drive sustainable development rather than simply reporting transactions. The research, in the International Journal of Managerial and Financial Accounting, discusses how accounting information systems might be adapted to help organisations reduce costs while advancing environmental and social goals.

Sustainable development is the practice of meeting current needs without compromising the ability of future generations to meet theirs. It requires balancing three factors: environmental protection, social well-being, and, of course, economics. This study argues that accounting systems might be aligned with these priorities to help businesses balance them by revealing inefficiencies, guiding investment, and offering reliable forecasts.

The researchers have drawn on data from accounting and auditing professionals across a range of organisations. Their statistical analysis shows that when sustainability-orientated information is integrated into accounting systems, firms are better positioned to reduce their production costs, cut waste, and lower their greenhouse gas emissions. For instance, by tracking not only financial expenditures but also environmental impacts such as energy use or waste disposal, companies can identify hidden costs that traditional accounting might overlook. This could allow for more effective resource planning and increase innovation in product design or manufacturing processes.

The findings also underline the importance of developing accounting standards that explicitly incorporate sustainability. Conventional accounting practices were primarily designed for investors, creditors, and regulators, so focused on profitability and solvency. Sustainable accounting requires a broader perspective and demands the integration of non-financial measures, such as carbon emissions, water use, and labour conditions, into the same reporting systems that track sales or expenses. The evolution of accounting systems in this direction will help businesses and policymakers to see the bigger picture of the costs and benefits of their activities.

Mahlhal, A.H., Mohammed, M.A. and Jebur, A.K. (2025) ‘Sustainable accounting information and its role in achieving the requirements of sustainable development and reducing costs’, Int. J. Managerial and Financial Accounting, Vol. 17, No. 5, pp.1–22.