Green Deal Needs New Accounting Standard

The European Commission wants to provide trillions of euros in funding to help companies become climate neutral. Given this generous financial support, society expects an equivalent effort from corporations. However, the mentioned monetary amounts scare off many companies and trigger defense mechanisms rather than the willingness to change.

Companies would be more willing to become climate neutral if we already had binding holistic accounting in Europe that reflected the positive and negative influences of entrepreneurial trade. This means that if we could measure, price, and report economic and social performance and environmental consumption based on a standard and compare companies this way, we would have a solid basis for reporting the true impact of corporations. Furthermore, the necessary EU resources could be calculated more precisely.

Not all companies can grow in a climate-neutral way and not all companies can employ many people or pay high wages due to international competition. However, efforts in this direction — like reducing the consumption of resources and training people but still turning a profit — can be proven with holistic accounting. The legislation could support companies in their transformation via its adapted regulatory system. 

This is the goal of the Value Balancing Alliance: to map companies’ entrepreneurial impact and value contribution to society in a new standardized model. This would enable companies to balance and manage their performance regarding profit, social affairs, and environmental aspects in a way that benefits all stakeholders.

With this standard, the EU can make the Green Deal more tangible and more easily manageable.

Find more information about the Green Deal on the European Commission website here