Accounting and Reporting for Externalities: Balance of Externalities

Abstract

Accounting rules have improved the transparency of corporate operations. Financial statements provide shareholders with reliable information on performance and risk. However, these standards do not provide a larger vision of the role of a company in society; nor do they include any information on sustainable and responsible corporate strategies. This article proposes a new type of financial statement, one that addresses the issue of the evaluation of externalities for a company. This new financial statement is intended to enlighten stakeholders with respect to the environmental, social, and economic impacts of a company.