Abstract
This paper builds upon prior research regarding the quest for a sustainable measuring method. Here, we present a method to integrate sustainability and financial accounting at the level of transaction recording and introduce the concept of environmental debit and credit entry. This concept is illustrated through investment reporting. Identification of the research gap is based on the review of the initial population of 141 research papers and is supported with the European legal framework analysis. Logistic regression on the 500 largest European-based companies justifies the environmental footprint inclusion into the integrated journal entry. This study provides robust data concerning the limitations of the current financial reporting system. Our findings support the conclusion that the currently applied hybrid sustainable disclosure with synthetic ratios, indicators and unstructured narratives failed to provide a comprehensive and auditable picture of a company’s environmental.
Highlights
This study presents an environmental perspective in financial reporting regarding the disclosure of investments
The COVID-19 stress tests accelerate the search for the potential digitalization of multi-dimensional communication [1,2,3,4,5,6,7,8]
Financial reporting is based on the model of aggregation of economic transactions in a double-entry system
Summary
This study presents an environmental perspective in financial reporting regarding the disclosure of investments. Financial reporting is based on the model of aggregation of economic transactions in a double-entry system It is probably the oldest arithmetic and business concept in economic practice, dating back to at least the 14th century [9]. This study outlines the concept of a multi-purpose record as a mechanism for changing the financial reporting model to reflect the effects of human use of the environment. It fills a gap in the discussion of integrated business reporting with a proposal to record environmental impacts at the level of individual transactions as opposed to the currently used synthetic indices or descriptive disclosures
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