Keeping track of cash flow is essential for any business.

However, increasingly companies are realising it is essential to account for more than just their income and outgoings, they also have to monitor the cost and benefit of their work on society and the environment.

At Lancaster University, Professor Jan Bebbington dedicates her time to working with businesses to help them keep track of their impact to ensure good results for the planet and their bottom line.

Jan is also director of the University’s Pentland Centre for Sustainability in Business.

She says all accounting is focused on either controlling what is happening in an organisation or presenting that information to people externally.

"You can do that in a plain colour, or you can do it in a green colour. A green bean counter is something quite different, we're interested in more things,” she says.

"People start out by thinking that accounting is just a technical measure, that it's about keeping track of money; how you get a loan, how much you pay for it, when you make something, how much you charge someone to buy it.

"It is all of those things, but it's also a social process as well.

“An environmental accountant is interested in the environmental implications that arise from technical accounting, but then also how accounting and finance related things can help organisations be more responsive to environmental concerns.”

Jan says environmental accounting often focuses on three issues; climate change, nature loss and so-called ‘novel materials’ which can cause harm, including plastic waste and pollution, with all of these issues inevitably bound up with social implications for people and their health.

The power of finance to affect the environment has been in evidence for a long time via government subsidies which are paid to encourage certain outcomes.

In the world of banking, companies can now also access sustainability linked loans, which offer businesses a beneficial rate of interest based on them hitting certain environmental targets.

Lancaster University itself is the recipient of such a loan in the form of a £60m sustainability-linked five-year revolving credit facility from Santander, which is dependent on it achieving certain sustainability performance targets.

This includes goals such as reducing carbon emissions by 40 per cent and increasing the amount of renewable energy it generates by 250 per cent by July 2026.

Jan says the incentive for lenders of such loans is that they believe there is less risk in lending to businesses which can manage their environmental and social impacts better.

Businesses and other organisations are also increasingly working with environmental accountants to assess their own overall impact and its implications, far beyond the figures included on their balance sheet.

"Most large organisations on the globe also produce non-financial information. This will be all sorts of information, which is either not captured or incompletely captured in the financial accounts," says Jan.

"But non-financial information might become financial at some stage in the future. You might be talking about your emissions, how you're tackling greenhouse gases, how you're trying to sort out your procurement so you're not so exposed to fluctuations in the price of procurement, or producing greenhouse gas from procurement.”

Although larger firms may collect this information in a more formal way, Jan says it is just as available to smaller businesses.

"We're all telling stories about, ‘Here's the money I made, but here's the other things I did as well’. It's merging those two things together to be a social environmental account.”

Environmental accounting is often most revealing when it is applied to larger organisations which oversee a wider system with multiple interests, issues, inputs and potential outcomes, for example local authorities or utilities companies.

"It creates the possibility to add things up as a system, because organisations are often too small to be able to be good guardians of a system,” says Jan.

She is currently working with the Seafood Business for Ocean Stewardship project (SeaBOS), in which some of the biggest seafood companies in the world are collaborating to try and fish more sustainably.

"They have good traceability of their activities and know every bit of fish protein that they either capture, they buy from someone else, or they raise themselves,” says Jan.

The companies are then able to say whether the fish were caught in sustainably managed areas or not or if this is unknown, making it possible to improve the sustainability of the fishing supply chain overall.

Jan says a key part of this kind of project involves companies that are commercial competitors collaborating on information sharing on environmental issues.

"They are collaborating to sort out the production side so that that's right and then you can compete on which can of tinned tuna you're going to buy,” she says.

However, a similar approach can also work for smaller businesses who want to interrogate their own environmental balance sheet.

"The first thing I'd probably want to do is to look at your basic carbon footprint, so to know where the carbon is tied up in the system and then work on a carbon reduction plan,” says Jan.

“I'd be pretty interested in where the raw materials come from and the risks associated with that.” In addition, they can also look into finding solutions to any environmental impacts they create, for example waste.

"Even upon first glance, if you're a company, you've done your carbon footprint and the results are terrible, then it's something you can work on and it's incremental,” she says.

"I really like working with people over the longer term to sit alongside them and try to figure out how to do better.”