Abstract
Conventional accounting practices in extractive industries systematically overstate income by failing to deduct the economic cost of non‑renewable resource depletion. This leads to financial statements that present unsustainable earnings as if they were genuine profits, misinforming stakeholders and undermining capital maintenance. This paper proposes a comprehensive user cost accounting framework that integrates natural capital depreciation, carbon budget constraints and reinvestment behaviour into corporate financial reporting. Inspired by Keynes and El Serafy, the user cost approach differentiates between true sustainable income and asset liquidation, allocating a portion of resource rents for capital replacement to ensure intergenerational equity. The framework is developed in eight dimensions: a critical review of traditional vs. sustainable accounting; creation of a reinvestment scorecard to measure capital replenishment performance; introduction of a Sustainability‑Weighted Cost of Capital (SWACC) to align discounting with long‑term societal preferences; construction of dual financial statements contrasting conventional and sustainable reporting; extension to carbon budget accounting as an emissions depletion model; integration of human and social capital depreciation metrics; exploration of blockchain technologies to secure ESG data transparency; and policy recommendations for standard‑setters and regulators. Empirical validation includes case studies of Freeport‑McMoRan, Anglo American and Ørsted. The study contributes a novel, operationalisable framework for sustainability accounting in extractive sectors, aligning corporate financial metrics with long‑term resource stewardship and climate constraints.