Calculation of environmentally sustainable residual income (eSRI) from IFRS financial statements: An extension of richard (2012)

Brown, PJ

Calculation of environmentally sustainable residual income (eSRI) from IFRS financial statements: An extension of richard (2012)

Brown, PJ

Permalink

Publication Type:: Chapter
Citation:: IFRS in a Global World: International and Critical Perspectives on Accounting, 2016, pp. 141 - 157
Issue Date:: 2016-01-01

Closed Access

	Filename	Description	Size
	ebscohost.pdf	Published version	403.79 kB	Adobe PDF	View/Open

Copyright Clearance Process

Recently Added
In Progress
Closed Access

This item is closed access and not available.

Full metadata record

Field	Value	Language
dc.contributor.author	Brown, PJ https://orcid.org/0000-0002-8603-0280	en_US
dc.date.issued	2016-01-01	en_US
dc.identifier.citation	IFRS in a Global World: International and Critical Perspectives on Accounting, 2016, pp. 141 - 157	en_US
dc.identifier.isbn	9783319282237	en_US
dc.identifier.uri	http://hdl.handle.net/10453/100893
dc.description.abstract	© Springer International Publishing Switzerland 2016. This chapter presents a flexible approach to evaluating the extent to which an organisation has the capacity to be both environmentally and economically sustainable based on financial statements, namely Environmentally Sustainable Residual Income (eSRI). Problematically, despite International Financial Reporting Standards (IFRS) being a key information source for investors and other stakeholders, they give little consideration to natural and social capital in the construction of financial statements. eSRI builds on the approach to financial statement analysis advocated by Penman (Financial statement analysis and security valuation, 5th edn. McGraw-Hill/Irwin, 2012) and others, whereby users make adjustments to financial statements to derive more informative accounts. eSRI is defined as Net Profit less (i) a capital charge to evaluate economic sustainability, and (ii) environmental sustaining costs. Environmental sustaining costs are an estimate of a charge to replace or restore natural capital degraded in earning the income; essentially an opportunity cost generated by the organisation’s activities. The calculation provides a representation (albeit with error) of how much environmental capital has been destroyed in the generation of income. A key advantage of eSRI is that it allows users to combine non-financial information disclosures (such as carbon emissions) with financial indicators in a theory informed manner. eSRI will be of interest to stakeholders with an interest in estimating the extent to which an organisation has the potential to be both economically and environmentally sustainable.	en_US
dc.relation.ispartof	IFRS in a Global World: International and Critical Perspectives on Accounting	en_US
dc.relation.isbasedon	10.1007/978-3-319-28225-1_11	en_US
dc.title	Calculation of environmentally sustainable residual income (eSRI) from IFRS financial statements: An extension of richard (2012)	en_US
dc.type	Chapter
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Transdisciplinary Innovation
utslib.copyright.status	closed_access
pubs.publication-status	Published	en_US

Abstract:

© Springer International Publishing Switzerland 2016. This chapter presents a flexible approach to evaluating the extent to which an organisation has the capacity to be both environmentally and economically sustainable based on financial statements, namely Environmentally Sustainable Residual Income (eSRI). Problematically, despite International Financial Reporting Standards (IFRS) being a key information source for investors and other stakeholders, they give little consideration to natural and social capital in the construction of financial statements. eSRI builds on the approach to financial statement analysis advocated by Penman (Financial statement analysis and security valuation, 5th edn. McGraw-Hill/Irwin, 2012) and others, whereby users make adjustments to financial statements to derive more informative accounts. eSRI is defined as Net Profit less (i) a capital charge to evaluate economic sustainability, and (ii) environmental sustaining costs. Environmental sustaining costs are an estimate of a charge to replace or restore natural capital degraded in earning the income; essentially an opportunity cost generated by the organisation’s activities. The calculation provides a representation (albeit with error) of how much environmental capital has been destroyed in the generation of income. A key advantage of eSRI is that it allows users to combine non-financial information disclosures (such as carbon emissions) with financial indicators in a theory informed manner. eSRI will be of interest to stakeholders with an interest in estimating the extent to which an organisation has the potential to be both economically and environmentally sustainable.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/100893