Environmental management and regulation: pitfalls of environmental accounting?

Purpose – The paper aims to identify and explicate the inconsistency between European and Italian accounting laws and regulations and sustainable investments and their accounting disclosure. It argues that these legal rules, currently governing corporate investment and financial accountability, prevent adequate corporate sustainability investment, accounting and disclosure. Design/methodology/approach - The discussion is based on the support of the present management tools at the level of financial reporting. Findings - Reporting for environmental issues of a firm is disclosed in the financial report. The evidence shows that the categories of costs in the financial report scheme create a few possibilities to distinguish the environmental costs. Those considerations limit the “internalization” of environmental externalities and they do not support the concept of a pro-active environmental system. Originality/value - The information demonstrates the potential of accounting to make things visible and measurable and the willingness to take this opportunity to solve the urgency of the environmental problems. In doing so, the work contributes to the present debate on environmental management systems, through a detailed and in-depth analysis of the accounting loci for environmental issues.