Environment sustainability reporting to be compulsory; accounting standards being made

In an effort to encourage environment-friendly production methods, the government is working out a comprehensive accounting standard on environmental reporting. It will soon be mandatory for companies to report measures taken to prevent environmental damage.

Revising the guidelines on corporate social responsibility (CSR) issued last year, the ministry of corporate affairs is adding detailed norms on environmental sustainability. The new rules are expected to prevent wasteful use of natural resources and ensure scientific treatment of industrial waste.

The present norms only urged companies to be environmentally conscious and left it for them to take steps in that direction. They failed to provide a clear framework for compliance, leading to companies not taking adequate measures.

The Institute of Chartered Accountants of India is working out a comprehensive accounting standard on environmental reporting to guide companies in the process. Although the norms are voluntary, they will require companies to report their performance in this regard in the form of disclosures in their annual reports.

The review will put in place an implementation format whereby the work can be effectively monitored.