IAI plans 'green' accounting standard

IAI plans 'green' accounting standard

Zakki P. Hakim, Jakarta

The Office of the State Minister for the Environment signed a
memorandum of understanding (MoU) on Tuesday with the Association
of Indonesian Accountants (IAI) for a collaborative effort to
establish a new accounting standard that would enable financial
statements to also reflect the level of environmental
responsibility of companies.

Minister Nabiel Makarim said that with such a standard, annual
reports would not only show a company's financial performance but
also what it was doing to preserve the environment.

"We want the market to be able to see whether a company is
environmentally responsible or not," Nabiel explained.

Nabiel said the environmental performance rating program
launched by his office recently had also affected the business
operations of the firms that had received ratings.

The program establishes five categories, gold, green, blue,
red and black, respectively reflecting company compliance with
environmental regulations.

"The companies that were assigned a red rating told me that
they have had difficulties in finding investors, export partners
and in obtaining loans. Some also said their shares had weakened
on the stock market," Nabiel said, adding that these companies
were now working to improve their ratings.

Nabiel said that the incorporation of environmental
responsibility in financial statements would push companies to be
more careful in dealing with their waste and the local
environment.

IAI chairman Ahmadi Hadibroto, however, could not say when the
new accounting standard would be implemented.

"We are now discussing it with all the stakeholders," he said.

Meanwhile, head of accounting and disclosure standards at the
Indonesian Capital Market Supervisory Agency (Bapepam), Anis
Baridwan, welcomed the plan to make companies more responsible in
protecting the environment.

"We welcome the minister's effort, but we don't know whether
the standard should be a requirement or merely a guideline, as we
would like to see companies applying it voluntarily, rather than
being obliged to," Anis said.