# The Implementation Measures of Environmental Accounting in Heavy Pollution Industry in the Context of Sustainable Development

Authors: Chun Cui; Dong Chen
Journal: Mobile Information Systems
 (2022)

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## Abstract

Since the 21st century, China’s science and technology and economy have been developing rapidly, but many enterprises are pursuing their economic interests at the expense of the environment. Therefore, research on the implementation of environmental accounting is not only of academic value but also of a practical significance to the implementation of the scientific concept of development and ecological environment. In this paper, we used literature analysis, case study, and fuzzy comprehensive evaluation to analyze the implementation of environmental accounting of “A” joint-stock company as an example and concluded that the problems of environmental information implementation in China are caused by imperfection of national macropolicies and laws and regulations, lack of concrete measures, and low management level, and lack of management concept of enterprises. Therefore, under China’s current policy, further improving the implementation of the internal environmental accounting of enterprises is of constructive significance to promoting ecological civilization and sustainable development.


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## Body

## 1. Introduction

In recent decades, China’s economy has been in a stage of rapid development, and the ecological deterioration caused by industrial development has also followed, such as the persistent fog angle phenomenon, serious heavy metal pollution of land, industrial waste water pollution of rivers, and soil desertification. However, as China’s economy has reached a new stage, people are more and more concerned about the ecological development, and the country has begun to implement environmental policies such as sustainable economic development and ecological civilization [1]. Environmental pollution mainly comes from production-based pollution, that is, manufacturing enterprises or agricultural production process of harmful substances emitted into environment: living pollution, transportation pollution, and other sources of pollution. According to the environmental protection department statistics, production-oriented pollutants accounted for 80% [2]. This requires enterprises to pay attention to the environmental protection issues and increase the environmental protection investment. Environmental protection departments should develop more stringent environmental protection policies. At the same time, enterprises are also obliged to implement environmental accounting to public in a timely and adequate manner, which serves as a bridge between internal information and external information of enterprises [3–5]. It plays a very important role for decision makers who use information to judge potential risks and competitive advantages of company based on environmental accounting [6].The environmental accounting in China happened in recent years, and it is in the initial stage of influence of traditional financial accounting, whether in accounting theory system or mandatory laws and regulations [7]. Environmental accounting is an important part of accounting system, and many accounting scholars have made preliminary exploration on it in these years [8]. However, at present, there is still no mandatory regulation and system for implementation of environmental accounting, and enterprises usually consider their own favorable factors when implementing information. There are selective behaviors. Implementation of environmental accounting is still very confusing in terms of content and form, and there is a lack of unified regulations, which leads to comparability of accounting information that cannot be fully reflected [9–12]. This is not conducive to users of accounting information to make reasonable guesses and evaluations of potential risks and future development of enterprises [13]. Therefore, it is necessary and essential to discuss current situation of information implementation in heavy pollution industry and analyze problems, to further improve implementation of environmental accounting.This paper focuses on issues related to implementation of information in heavily polluting enterprises, that is, specific contents and methods of information implementation, as well as the status of contents and methods of information implementation and areas that should be improved. This paper further elaborates the concept of environmental accounting implementation in heavy polluting industries and characteristics of environmental accounting implementation in heavy polluting industries with case study of A JSC. This paper adopts a classification method to explain problems in implementation of environmental accounting of A JSC from perspective of internal and external causes and introduces experience of implementation of environmental accounting in heavily polluted industry in developed countries, such as US and Japan.In this paper, we used literature analysis, case study, and fuzzy comprehensive evaluation to analyze implementation of environmental accounting of a joint-stock company as an example and concluded that the problems of environmental information implementation in China are caused by imperfection of national macro policies and laws and regulations, lack of concrete measures, and low management level and lack of management concept of enterprises. Therefore, under China’s current policy, further improving the implementation of internal environmental accounting of enterprises is of constructive significance to promoting ecological civilization and sustainable development.


## 2. Related Studies

The study of environmental accounting began in the 1970s. Represented by two articles published by F. A. Beams in 1971, “The Transformation of the Social Cost of Controlling Pollution” and “The Accounting Problems of Pollution” published by J. T. Marlin in 1973,” the prelude to environmental accounting research was unveiled. Due to prominent environmental problems, accounting theories generally pay attention to research on implementation of information, and a series of related laws and regulations by government agencies of various countries were also introduced. Private organizations also began to issue self-regulatory industry norms, and laws and regulations on implementation of information gradually became perfect [14]. We concluded that to improve the information implementation system and quality of information implementation, it is necessary to increase participation of public, widely publicize environmental protection laws and regulations among public, and report on pollution of environment by enterprises. The composition of the company’s executives and information implemented by the company to the public will affect its own business situation to a greater or lesser extent and even affect survival and development of company. Reference [15] shows that the annual report is an effective way to implement environmental accounting, but the implementation of environmental accounting only in the annual financial report leads to a single implementation vehicle, and the implementation of separate environmental reports is a necessary development of theory and practice. It is considered that there are a series of problems in implementation of environmental accounting in enterprises, including incomplete implementation content, single mode of implementation, and low efficiency of implementation. Reference [16] analyzed social responsibility accounting information in annual reports of listed companies in heavy pollution industry and proposed a view that social responsibility information includes information, and financial reports should contain important information, such as introduction of laws and regulations closely related to environmental protection, introduction of environmental pollution control adopted by enterprises, and countermeasures against environmental risks, and they can be further subdivided [17]. After investigation and research, we believe that companies should mainly report the following information when implementing information: resource compensation fee, resource tax, greening fee, sewage fee, and environmental related certification related to environmental performance information, which is mainly in a monetary form when implementing, and also be annotated in notes to accounting statements [18, 19]. Analyzing a sample of 111 companies in A-share listed companies in heavy pollution industry and analyzing the external factors that affect implementation of environmental accounting, we concluded that the environmental protection department’s financial investment in environmental management, national, and regional economic level can have a positive effect on implementation level of information, but the degree of public awareness of environmental protection has a little effect on implementation level of information. However, the level of public awareness of environmental protection has a little effect on the level of information implementation [20].


## 3. Environmental Accounting Framework

The environmental accounting standards should be established under auspices of Ministry of Finance, Securities and Futures Commission, and other relevant departments. Experts and scholars should be organized, successful experience of foreign countries should be considered, universal experience should be combined with special ones, principles of operability, foresight, and development should be followed, an environmental accounting standards system should be established (see Figure1), and an environmental accounting guide should be added.Figure 1
Construction ideas of environmental accounting standard system.The governmental platform of environmental accounting (Figure2) is built, and the information system of environmental performance evaluation of heavy polluting enterprises is established. The environmental performance of enterprises is publicly released and ranked on a regular basis to accept supervision of public and various stakeholders. We will issue violation reports for all violations and accept supervision of supervisory and law enforcement departments and at same time set high fines and expose their violations through formal channels to increase cost of violations and pressure of public opinion.Figure 2
Government platform for environmental accounting information.“A” was incorporated in 1994 and was successfully listed on “XX” stock exchange in September 2001. It is a large paper company in “XX” province and has performed well in recent years in production of chemical products. The details are shown in Figure3.Figure 3
Production business relationship of a joint stock company.The main nonfinancial information currently involved in the implementation of environmental accounting in company A is environmental. The advantages of technology and implementation of policy and emission of pollutants are shown in Figure4.Figure 4
Current situation of environmental accounting nonfinancial information disclosure of a joint stock company.This paper is different from previous studies on implementation index of environmental accounting. In this paper, environmental accounting is divided into financial information and nonfinancial information, and different scores are assigned to government subsidies and construction in progress depending on the number of projects, and it is worth noting that, in Figure5, the environmental protection and greening costs include environmental protection costs and environmental maintenance costs.Figure 5
Scoring standards for environmental accounting information disclosure.An overall goal of implementation of environmental accounting is to clarify future development direction of implementation of environmental accounting in China, and a specific goal is to make practical requirements for implementation of environmental accounting in enterprises. The goal of implementation of environmental accounting is to enhance the supervision of environmental protection of enterprises and promote the realization of sustainable development, which requires coordination of social, environmental, and economic benefits. If an enterprise ignores the environmental interests, this will have a serious impact on economic interests of the enterprise and the development of social community, which also depends on the environmental and economic benefits. These three benefits need to be reflected by monetary and nonmonetary information, as shown in Figure6.Figure 6
Relationship between environmental accounting information disclosure.


## 4. Fuzzy Integrated Evaluation Method

The main steps are as follows.In the first step, the evaluation index system is established, and the weight of each index is calculated using hierarchical analysis to obtain the weight set.In the second step, the evaluation set of comprehensive evaluation is established, and the evaluation level and corresponding score are clarified.For example, ify valid questionnaires are returned, and x of them evaluate index D1 as “good,” then the affiliation of index D1 corresponding to the evaluation level “good” is the degree of affiliation as follows:(1)rij=xy.Step 4: set weights through fuzzy operator “O” ω combined with membership matrix R; the evaluation result s is calculated.(2)s=woR,where “O” refers to the fuzzy operators. At present, there are four commonly used fuzzy operators.(1)
M∧,∨(3)sk=Vj=1mμj∧rjk=max1≤j≤mminμj,rkk=1,…,n.The evaluation result of this operator is determined by factors that play a major role in the evaluation process.(2)
M·,∨(4)sk=Vj=1mμj,rjk=max1≤j≤mμj,rjk,k=1,…,n.AndM∧,∨. There are certain similarities, but the calculation process is more comprehensive, and the results are more accurate. It not only highlights the main factors but also considers the impact of other factors. This operator is applicable to M∧,∨ situations that cannot be identified and require more accurate and comprehensive results.(3)
M·,+(5)sk=min1,∑j=1mμjrjk,k=1,…,n.The operator considers all the indicators and their weights comprehensively and can well meet the calculation needs of the maximum sum.(4)
M·,⊕(6)sk=min1,∑j=1mminμj,rjk,k=1,…,n.This operator has strict restrictions on the value of each factor. It can take neither a large nor small value. Otherwise, it is easy to make some factor evaluation information missing.To improve calculation accuracy, evaluation results are calculated with four decimal places.①
Calculation of the evaluation results of the financial status (C1): membership of DL, D2, and D3:(7)RD1−3=0.00000.00000.37500.62500.00000.00000.50000.50000.00000.00000.00000.00000.62500.37500.0000.DL,D2, and D3 index weights ωD1−3=0.1226,0.3202,0.5571T perform a fuzzy operation according to a selected operator.The fuzzy operation based on the selected operator is as follows:(8)RD1−3⋅ωD1−3=0.00000.00000.04600.07660.00000.00000.16010.16010.00000.00000.00000.00000.34820.20890.0000,RD1−3ωD1−3=0.00000.16010.55430.28550.0000.According to the principle of maximum membership, the evaluation result of financial condition (C1) is general.②
Calculation of the evaluation results of the business results (C2): membership of D4, D5, D6, and D7:(9)RD4−7=0.00000.62500.37500.00000.00000.00000.25000.75000.00000.00000.00000.50000.50000.00000.00000.00000.00000.00000.25000.7500.D4, D5, D6, and D7 indicator weights ωD4−7=0.0998,0.3451,0.3701,0.1850T perform a fuzzy operation according to a selected operator:(10)RD4−7⋅ωD4−7=0.00000.06240.03740.00000.00000.00000.08630.25880.00000.00000.00000.18510.18510.00000.00000.00000.00000.00000.04630.1388,RD4−7°ωD4−7=0.00000.33380.48130.04630.1388T.According to the principle of maximum subordination, the evaluation result of business results (C2) is general.③ The evaluation result of the environmental protection attitude (C3): subordination degree of d8, D9, and D10:(11)RD8−10=0.00000.25000.75000.00000.00000.00000.12500.87500.00000.00000.00000.37500.62500.00000.0000.D8, D9, and D10 indicator weight ωD8−10=0.1199,0.2721,0.6080TThe fuzzy operation based on the selected operator is as follows:(12)RD8−10⋅ωD8−10=0.00000.03000.08990.00000.00000.00000.03400.23810.00000.00000.00000.22800.38000.00000.0000,RD8−10°ωD8−10=0.00000.29200.70800.00000.0000.The assessment result of the environmental protection attitude (C3) is general.④ Calculation of the evaluation results of the environmental performance (C4): membership of DLL, D12, D13, D4, D15, and DL6:(13)RD11−16=0.25000.62500.12500.00000.00000.00000.00000.75000.25000.00000.00000.00000.12500.87500.00000.00000.00000.25000.75000.00000.00000.62500.37500.00000.00000.00000.50000.50000.00000.0000.The weights of DLI, DL3,D13, D14, D15, and D16 indicators are as follows:(14)ωD11−16=0.2426,0.1726,0.2426,0.2426,0.0591,0.0405T.The fuzzy operation based on the selected operator is as follows:(15)RD11−16⋅ωD11−16=0.06070.15160.03030.00000.00000.00000.00000.12950.04320.00000.00000.00000.03030.21230.00000.00000.00000.06070.18200.00000.00000.03690.02220.00000.00000.00000.02030.02030.00000.0000,RD11−16°ωD11−16=0.06070.20880.29320.43740.0000.The evaluation result of the environmental performance (C4) is poor.⑤ The membership degree ofD17, Dl8, and D19 is calculated based on the evaluation result of information disclosure reliability (C5):(16)RD17−19=0.00000.00000.62500.37500.00000.00000.00000.50000.50000.00000.00000.25000.62500.12500.0000.The weights ofD17, D18, and D19 indicators are as follows:(17)ωD17−19=0.6480,0.1222,0.2299T.The fuzzy operation based on the selected operator is as follows:(18)RD17−19⋅ωD17−19=0.00000.00000.40500.25430.00000.00000.00000.06110.06110.00000.00000.05740.14370.02870.0000,RD17−19°ωD17−19=0.00000.05740.60980.34410.0000.The evaluation result of information disclosure reliability (C5) is general.⑥ Evaluation result calculation of information disclosure timeliness (C6): membership degree of D20 and D21:(19)RD20−21=0.00000.00000.00000.12500.87500.00000.62500.37500.00000.0000.D20 and D21 indicator weight ωD20−21=0.3333,0.6667T.Perform the fuzzy operation according to the selected operator:(20)RD20−21⋅ωD20−21=0.00000.00000.00000.02080.14590.00000.41670.25000.00000.0000,RD20−21°ωD20−21=0.00000.41670.25000.04170.2916.Evaluation result of information disclosure timeliness (C6) is good.


## 5. Results

Take 2014–2018 as an example to see the basic situation of the main operating business of A JSC, as shown in Table1. The trend of gross margin is shown in Figure 7.Table 1
Main business by industry (unit: 10000 yuan).
CategoryTheme/year20142015201620172018Business incomePaper products7337547.87702547.14803571.411024851.231125728.39Chemical products102587.58136147.58160748.74212584.01260024.23Operating costsPaper products653571.2524781.87028731.98874124.239584476.35Chemical products809578.561047005.14139287.88163574.872856471.35Gross profit marginPaper products10.97%11.25%12.87%15.56%13.28%Chemical products21.25%23.02%18.36%25.34%19.25%Figure 7
Trend of gross margin.As shown in Table1, from 2014 to 2018, A AG’s revenue is mainly based on sales of paper products, supplemented by sales of chemical products. Although the sales revenue of A AG’s paper products is higher than that of chemical products, its production cost is also higher than that of chemical products. From the gross margin trend graph, we can conclude that the profit from the sales of chemical products of A JSC is better than the profit from the sales of paper products during 2014–2018. The paper industry is a heavily polluting industry, and chemical industry is resource-intensive and polluting to environment. Since the main industries of A are polluting to the environment and have a high demand for resources, implementation of environmental accounting should be more detailed and standardized than that of other companies. The environmental costs and potential benefits from environmental inputs and specific emissions should be reflected in annual report.In Table2, it can be seen that A JSC has been paying environmental protection fees and environmental maintenance fees for five years from 2014 to 2018, and since only data on these fees are mentioned in annual report, we conducted a field research on why these two fees were paid but did not receive a valid answer. We were informed that the resource tax was only listed in 2018 annual report, and that in previous years, resource tax was included in water fee, and water and salt are the main raw materials for the chemical production of A JSC. Meanwhile, we were informed that A JSC was in the transitional stage of fee to tax conversion in 2018, and fee to tax conversion would be completed in 2019; from then on, no more emission fees would be paid, and the environmental protection tax would be paid directly according to emission standard.Table 2
A joint stock company’s 2014–2018 expense income environmental accounting (unit: yuan).
Date20182017201620152014Environmental protection fee150547824.1823547528.5818324742.2513258712.0081874253254.41Subsidy for environmental treatment1259420008524000257420Sewage charge3542145.15174585435.1212547562.748541225.629871248.12Environmental maintenance fee125483258.85165147526.71165871288.45132557856.0918475245.48Resource tax23365871.24Environmental protection tax8258712.85Table3 shows that government subsidizes more environmental protection projects, which reflects importance of green production and high pollution level of production activities of “A.” The field research and staff of finance department of “A” company were informed that key environmental management projects and environmental monitoring projects required by national and provincial authorities are usually subsidized with special funds for specified project expenses, which are based on financial expenditures, relevant construction contracts, and acceptance materials. After asking the staff of ultra-low emission project team, we learned that ultra-low emission project is based on original desulfurization, denitrification, and dust removal by adding equipment and transforming process to further treat sulfur dioxide, ammonia oxides, and soot in flue gas, so that index is reduced. The fourth phase of company’s deep water treatment project was put into operation, which adopts world standard deep treatment process, and COD of drainage water was reduced to below 40 mg/l, and the color was less than 20 times, which became an advanced water treatment model project. However, after field research, it is found that this project will still produce waste gas, wastewater, solid waste, and noise in the treatment of wastewater, so reasonable and effective measures should be taken during operation of project to ensure that pollutants meet discharge standards, such as chemical scrubbing + photocatalytic oxidation equipment for treatment of waste gas, nitrobenzene, and aniline. For boiler flue gas denitrification transformation project, mainly to deal with exhaust gas, so as not to cause air pollution, the project in 2018 just amortized to nonoperating income. The wastewater treatment project and alkali recovery renovation project have not yet been put into operation. The dust control project was completed in 2017 and was fully amortized in 2017 and included in the nonoperating income. The white-water treatment project is to treat white water of papermaking, improve reuse rate of white water, reduce discharge of white water, and treat polluting substances contained in white water. The special subsidies for water are aimed at improving and reusing wastewater standards, increasing water availability, saving resources, and helping environmental protection.Table 3
A” amortization items of government subsidies related to assets of joint stock company from 2014 to 2018 (unit: yuan).
Date20182017201620152014Pollution control project2351000.212350000235000023957012350000Ultra-low emission project65827.12Special funds for recycling transformation30000Advanced sewage treatment project341254.54125873.64125684.54156552.84166687.2Advanced wastewater treatment phase IV project262030.25402543.584032146.574932483.6491666.65Advanced wastewater treatment phase IV project10165473.2————Dust control works1000000————White water treatment technology transformation project552000552000552000552000552000Provincial environmental protection special treatment project180000180000180000180000180000Special water subsidy fund (phase II)2708741.94166447.5412655.85222222.222Table4 shows that there are several environmental projects under construction, and four new environmental projects are under construction in 2018, which shows that A JSC is making progress in environmental protection and constantly upgrading environmental projects. Among them, wastewater treatment project was completed and transferred to fixed assets in 2015. The boiler emission super low project was completed and transferred to fixed assets in 2017.Table 4
A list of projects under construction of joint stock company from 2014 to 2018 (unit: yuan).
Date20182017201620152014Waste resource utilization (power plant)54584726.51————Sewage upgrading and reconstruction15478215.23————Soft drink bag recycling project165871258.52————Thermoelectric energy saving transformation project3325468.20————Ultra-low emission environmental protection project4214582.215775249.45199745843.73——Sewage treatment project———1685472.4873248215.54Boiler ultra-low emission project—27842624.1511745260.9——Table5 shows that the implementation of environmental accounting of A JSC is not centralized. Although it has implemented some of the environmental accounting in its annual report, its data is included in the balance sheet, income statement, and cash flow statement of financial statements but not implemented directly. The information on construction in progress, government grants, and so on is obtained in notes to financial statements and is scattered, while social responsibility report of A JSC only briefly mentions environmental policy and energy consumption. However, the production of A JSC is both polluting and resource-intensive and should be implemented in social responsibility report. The implementation of environmental accounting in internal control report may be appropriate according to the company’s actual situation and management’s wishes [21, 22].Table 5
An environmental accounting information disclosure method of joint stock company.
Disclosure contentAnnual reportSocial responsibility reportInternal control reportEnvironmental asset informationPartial data information and text information of construction in progressUndisclosedUndisclosedEnvironmental liability informationUndisclosedUndisclosedUndisclosedEnvironmental cost informationSome data informationUndisclosedUndisclosedEnvironmental benefit informationSome data information (government subsidies)UndisclosedUndisclosedEnvironmental R & D informationText informationUndisclosedUndisclosedEnvironmental policy informationText informationText informationUndisclosedPollutant dischargeQuantitative informationUndisclosedUndisclosedEnergy consumptionText informationText informationUndisclosedAs can be seen from Table6, in 2018, there are eight extra government grants amortized in the current period, and an additional three points are assigned. The government grants for assets are not only quantitative but also have detailed descriptions in notes for each of government grants related to environment, so three points should be assigned for government grants, and additional points should be assigned for a total of six points.Table 6
Current amortization amount of government subsidies (unit: yuan).
ProjectAmount of moneyPollution control project23500214.54Ultra-low emission project602547.25Special funds for recycling transformation30000Advanced sewage treatment project32451.07Advanced wastewater treatment phase IV project2620343.1Used for boiler flue gas denitration transformation project102543.3560000 Nm3/d biogas recovery resources comprehensive utilization project492587.62White water treatment technology transformation project55254.04Provincial environmental protection special treatment project180000.0Special water subsidy fund (phase II)2785214.02The Environmental are described in detail in statements. However, it is generally believed that the more the EDI is close to 1, the higher the quality of implementation of environmental accounting. Therefore, A AG still needs to further strengthen the implementation of environmental accounting as shown in Figure8. Accounting Information Implementation Index (EDI) is an assessment of the quality of implementation of environmental accounting. The line graph shows that EDI of A JSC is increasing from 2014 to 2018, which indicates that the quality of implementation of environmental accounting is gradually improving as more and more itemsFigure 8
A line chart of share environmental accounting information index.Meng Feng Environmental Technology is an environmentally friendly company, which is mainly engaged in environmental management, so it implements environmental accounting in more detail to highlight nature of its business. The comparison line graph in Figure9 shows that the quality of environmental accounting implementation of Meng Feng Environmental Technology is better than that of “A.” The implementation of information of “A” should be improved step by step, first to extent of Meng Feng’s information implementation and then to further improve. In recent years, environmental accounting index of both companies has been on the rise, which should be related to the implementation of the strictest new Environmental Protection Law in history on January 1, 2015, and the subsequent introduction and release of programmatic documents such as “Water Ten” and “Notice on Construction Program of Ecological and Environmental Monitoring Network.” The new law and regulations are closely related to the state’s attention to environment, which has caused a high degree of concern among enterprises.Figure 9
A line chart of comparison between “A” joint stock company and Meng Feng environmental technology.


## 6. Conclusions

In this paper, we used A JSC as a case study of a heavily polluting company and found that its implementation level of environmental accounting from 2014 to 2018 is on an increasing trend, and the implementation level has improved significantly in recent years. However, there are still problems such as incomplete implementation, low value of implementation contents, and irregular implementation forms, which conceal some negative information. At present, the state is not strong enough to supervise the implementation of environmental information of enterprises, and relevant laws and regulations should be formulated to regulate it. To improve the level of implementation of environmental accounting, joint efforts of the “A” joint-stock company, third-party monitoring agencies, social groups, and government are needed.



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