Green accounting did not emerge as a single, clearly defined accounting method. It developed gradually as governments, organisations, economists and accounting professionals recognised that conventional economic measures provided an incomplete picture of development. Traditional accounting concentrated on financial transactions and economic performance, while natural-resource use and the environmental consequences of production were often treated as external to the accounting system. As industrial activity expanded, pollution, resource depletion and ecological deterioration made that separation increasingly difficult to sustain ^[1][2][3][1,2,3].

Environmental concerns gained greater international attention during the 1960s and 1970s. Rapid industrialisation and economic growth created benefits for many societies, but they also produced visible environmental pressures, including air and water pollution, increasing volumes of waste, deforestation and the intensive use of energy and raw materials. The United Nations Conference on the Human Environment, held in Stockholm in 1972, was an important milestone because it placed environmental protection on the international political agenda and emphasised the relationship between environmental quality and economic development [4].

During this early period, economists and policymakers began to question whether indicators such as gross domestic product could adequately represent social progress. Economic output could increase even while forests, minerals, water resources and other natural assets were being depleted. Expenditure undertaken to repair environmental damage could also increase measured economic activity even though it reflected a loss of environmental quality. These limitations encouraged the search for accounting approaches that could connect economic performance with changes in the natural environment [5].

A major conceptual development occurred in 1987 with the publication of Our Common Future by the World Commission on Environment and Development. The report established sustainable development as an influential international principle and argued that present needs should be met without compromising the ability of future generations to meet their own needs. This understanding strengthened the view that economic decisions should consider their long-term environmental consequences. It also encouraged the development of measurement systems capable of assessing whether economic growth was being achieved at the expense of natural resources or ecological stability [6].

The United Nations Conference on Environment and Development, held in Rio de Janeiro in 1992, provided further momentum. Agenda 21 called for environmental and developmental considerations to be integrated into decision-making and specifically encouraged systems that combine environmental and economic accounting. This represented an important shift from treating environmental information as a separate collection of statistics towards incorporating it into established systems of economic measurement [7].

In response to these developments, the United Nations published the first Handbook of National Accounting: Integrated Environmental and Economic Accounting in 1993. This framework later became known as the System of Environmental-Economic Accounting (SEEA). It was designed to extend conventional national accounts by including information about natural-resource stocks, environmental flows, resource depletion and environmental protection expenditure. A revised and more comprehensive version was issued in 2003, reflecting growing international experience with environmental–economic accounts. The framework enabled governments to examine how economic activities depended on natural resources and how those activities affected the condition of the environment ^[8][9][8,9].

At the organisational level, the development of green accounting followed a related but distinct path. During the 1980s and 1990s, companies faced stronger environmental regulation and increasing public concern about corporate environmental conduct. Many organisations began to disclose information about pollution control, environmental expenditure, waste management and compliance with environmental legislation. At first, these disclosures were often limited and largely voluntary. Nevertheless, they contributed to recognition that environmental matters could create financial costs, legal responsibilities, operational risks and reputational consequences ^[1][2][1,2].

Environmental management accounting subsequently developed as a means of improving internal decision-making. It sought to identify environmental costs that were frequently hidden within general production and administrative expenses. It also combined monetary information with physical information concerning flows of energy, water, materials and waste. The United Nations published guidance on environmental management accounting in 2001, and the International Federation of Accountants issued an international guidance document in 2005. These initiatives helped establish environmental management accounting as a practical approach to resource efficiency, cost control, investment appraisal and pollution prevention ^[10][11][10,11].

The expansion of corporate sustainability reporting also influenced the development of green accounting. The Global Reporting Initiative (GRI) was established in 1997 with the initial objective of promoting more consistent corporate environmental disclosure. Its scope later expanded to include wider economic, social and governance impacts. As sustainability reporting became more common, organisations were increasingly expected to explain not only their financial performance but also their use of natural resources and their effects on the environment [12].

A further milestone was reached in 2012 when the United Nations Statistical Commission adopted the SEEA Central Framework as an international statistical standard. The framework provided internationally agreed concepts for connecting environmental data with economic information and supported the preparation of comparable accounts relating to energy, water, materials, emissions, environmental expenditure and natural resources. In March 2021, the Commission adopted SEEA Ecosystem Accounting, which broadened this work by examining the extent and condition of ecosystems, the services they provide and their relationship with economic and human activity ^[13][14][13,14].

In the contemporary period, green accounting has continued to evolve in response to climate change, biodiversity loss, resource scarcity and demands for greater organisational accountability. Carbon accounting, natural capital accounting and sustainability-related financial reporting have become increasingly prominent. Modern green accounting therefore reflects the convergence of several earlier developments, including environmental economics, national environmental accounts, corporate environmental reporting and environmental management accounting. Although no single framework captures every environmental effect, the history of green accounting demonstrates a continuing effort to make the environmental consequences of economic activity more visible within measurement, reporting and decision-making systems.