Title: Carbon accounting framework for decarbonising: a fair value measurement approach for financial reporting in India

Authors: Sanjay Kumar Patel; Poonam Kumari

Addresses: Department of Commerce, School of Commerce and Management, Central University of Rajasthan, Ajmer, Rajasthan, India ' Department of Commerce, School of Commerce and Management, Central University of Rajasthan, Ajmer, Rajasthan, India

Abstract: To impose the liability on polluters instead of externalising to society, present study aims to identify the variables affecting fair value measurement of carbon footprints price to disclose in accounting reports and to examine the relationship between identified factors and carbon footprints price. Exploratory factor analysis and regression analysis was employed to specify the construct's independence and ability of independent variables to predict fair carbon footprints price in India. Five out of six independent factors, polluters pay principle, social cost of carbon, atmospheric damage, mandatory carbon reporting and corporate sustainability, in the proposed model were predictive of the fair value measurement of carbon footprints price and supported the proposed model. The study recommends that corporations should follow full-cost accounting principle to reflect the actual damage caused to society and environment. The study provides practical implications for policymakers, accounting professionals and government to streamline the mandatory carbon pricing accounting standard.

Keywords: fair value measurement; carbon pricing; polluters pay principle; accounting reports; exploratory factor analysis; regression analysis; India.

DOI: 10.1504/IJGE.2022.127910

International Journal of Green Economics, 2022 Vol.16 No.2, pp.204 - 218

Received: 31 Aug 2022
Accepted: 24 Nov 2022
Published online: 21 Dec 2022 *

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