Accounting Standard-Setting for an Emission Trading Scheme: The Korean Case

Abstract

This study examines the participation and interaction of relevant individuals in the process of developing an accounting standard for South Korea’s emission trading scheme (ETS). Despite the enormous accounting implications of such schemes, there is a paucity of research on the development and application of ETS accounting. Ulrich Beck’s and Anthony Giddens’s risk society framework is utilised to scrutinise the process of setting accounting standards—from the agenda-setting stage all the way to the final publication of the standard. In this case study, we take an interpretive approach in analysing the rich data collected through face-to-face interviews with prominent standard-setters, accounting experts and representatives of industry and government. Participant observation and relevant documents were also considered. The findings highlight the political nature of accounting standard-setting and identify the risks and responsibilities of the key agents in the process along with the means of sub-political action taken to influence decisions. We reveal that the agents involved in standard-setting attempted to balance their anthropocentric priorities with ecocentric responsibilities and prioritised the production of a standard with minimal impact on economic, reputational, and operational risk. Having authority as a standard-setter, referring frequently to precedents and, perhaps most importantly, engaging actively with the stakeholders throughout the process seem to have contributed to a widely accepted standard, which can serve as a benchmark for future attempts to factor in ETSs.

Corporate Greenhouse Gas Emissions’ Data and the Urgent Need for a Science-Led Just Transition: Introduction to a Thematic Symposium

“…The last paper (Kim et al, 2022) examines the participation and interaction of relevant individuals (e.g., standardsetters, accounting experts and representatives of industry and government.) in the process of developing an accounting standard for emission trading scheme (ETS) in South Korea.…”

Environmental and Accounting Regulation: Lessons from The EU ETS

“…Second, it aims to investigate how EU ETS affects the representation of environmental performance inside firms' financial statements. The institutional framework of EU ETS translates GHG emissions into emission allowances with market prices, and thus potentially permits the measurement of environmental performance and its inclusion into firms' financial statement through the accounting for emission allowances (Allini et al, 2018;de Aguiar, 2018;Gibson, 1996;Kim et al, 2023;Lehman, 1996;Milne, 1996;Rathee & Kapil, 2015;Stechemesser & Guenther, 2012;Wambsganss & Sanford, 1996). This study analyses the EU ETS emission allowances' accounting practices.…”