Environmental Management Accounting Research Articles

Application of ABB in environmental management accounting: Incorporating MFCA into the budget process

Traditional management accounting methods are difficult to provide the necessary information for environmental economic management decisions. In response to the increasingly urgent need for decision-related information, a new branch of accounting, environmental management accounting, has emerged and is receiving increasing attention. Material Flow Cost Accounting (MFCA) is a useful tool for managing complex resource and waste streams. However, MFCA is mainly used for ex-post accounting and reporting and no efforts are made to use it for forecasting. In this study, we introduce MFCA method into the budgeting process of manufacturing firms, and thus construct an MFCA-ABB (Activity-Based Budget) model. This model is applied to JLC Company which is a fragrant liquor manufacturer in China, in order to forecast and plan for its resource consumption, positive product output, and negative product generation. Based on the forecasts of involved material flows, inefficiencies in the company’s liquor production process are identified; scenario analysis is then conducted to determine the optimal process and the technology adopted. The proposed MFCA-ABB model turns a pure operating budget into an environmental-economic budget, thus achieving both environmental and economic benefits for the company. Besides, this study makes an attempt to apply ABB in environmental management accounting, which suggests the possibility of applying the conventional management accounting tools, after modified, to the environmental-economic management of manufacturing firms in the future.

Debating accounting and sustainability: from incompatibility to rapprochement in the pursuit of corporate sustainability

PurposeThis article explores and contrasts the views of two influential research projects within the social and environmental accounting space. Both projects advocate for sustainability. The first here referred to as the Critical Social and Environmental Accounting Project (CSEAP), was developed and championed by Rob Gray and calls for immediate radical structural change. The second one is called the Pragmatic Sustainability Management Accounting Project (PSMAP), championed by Stefan Schaltegger, and advocates for an entrepreneurial process of creating radical solutions in joint stakeholder collaboration over time.Design/methodology/approachThe paper is the culmination of a decade-long debate between Gray and Schaltegger as advocates of CSEAP and PSMAP, respectively. Specifically, the paper explores the differences and agreements between CSEAP and PSMAP on whether and how companies should pursue sustainability and the role of accounting in these efforts. The paper focusses on critical issues that exemplify the tension in their views: general goals, the role of structure and agency and how to creating change and transformation.FindingsThe article contrasts CSEAP's uncompromising antagonising approach to accountability and fundamental systemic change with PSMAP's pragmatic approach to sustainability accounting with its management and entrepreneurship-orientated approach to change and unwavering support for transformative managers on the front lines. Despite their apparent differences, the paper also outlines areas of agreement between these two positions and how accounting and sustainability can move forward.Research limitations/implicationsThe debate tries to reconcile language and conceptional differences in the social and environmental accounting (SEA) and sustainability management accounting (SMA) communities to reduce confusion in the research space over what sustainability is for organisations and what role accounting plays in this. The authors hope that the tension between the different positions outlined in this paper generates new insights and positions on the topic.Practical implicationsWhile the two views explored in this paper are primarily incompatible, each generates implications for practice, research and education. Debates like this are crucial to moving from discursive disagreement to creating a tolerant and robust foundation for moving forward and achieving much-needed sustainable transitions in the economy and society.Originality/valueThe authors offer shared understandings, points of continuing disagreement and alternative views on the nature of sustainability. The debate forges a bridge of understanding where both sides can learn from each other.

Promoting sustainable development through strategies, environmental management accounting and environmental performance

AbstractExtant research on environmental management accounting (EMA) has mainly emphasised its impact on environmental disclosures and cost measurements, while the role of EMA in environmental performance has largely been neglected. Hence, the study addressed the literature gap by applying the natural resource‐based view (NRBV) and the dynamic capabilities (DC) theory to investigate EMA as a fundamental managerial innovation mechanism that explains the relationship between environmental strategies and environmental performance. Questionnaires were used to gather data from 145 managers of ISO14001‐certified Malaysian companies. The results of the Partial Least Squares Structural Equation Modelling (PLS‐SEM) analysis demonstrated that EMA mediates the effects of pollution prevention and clean technology strategies on environmental performance but not the effect of the process stewardship strategy. The findings encourage companies to adopt specific environmental strategies to attain better environmental performance through EMA. Moreover, the results highlighted the company limitations in improving environmental performance. The study is one of the first few attempts to integrate EMA with environmental strategies through the application of the NRBV and the DC theory. Additionally, the study provides empirical evidence that efficient EMA management can be transformed into reasonable operational performance and produce positive outcomes.

The impact of environmental management accounting on environmental and financial performance: empirical evidence from Bangladesh

PurposeThis study aims to investigate the impact of environmental management accounting (EMA) on manufacturing companies’ environmental and financial performance in Bangladesh. Thus, this research recognizes essential factors such as EMA, environmental performance (EP), financial performance (FP), environmental information systems (EIS), knowledge management (KM), green innovation and energy efficiency (EE).Design/methodology/approachThis research uses a quantitative approach and uses 323 responses from the manufacturing firms. This research tests the study model through the “Partial Least Square-Structural Equation Modeling” (PLS-SEM) technique using Smart PLS v3.3 software. This research uses AMOS v24 and 40% sample consideration to check the robustness. The study passes various model fit measures, i.e. reliability, validity, factor analysis and goodness of fit.FindingsThe research finds that EMA is positively and significantly associated with EP and FP. The study also finds a substantial relationship between recognized factors with EMA and EP. This research connects the stakeholder theory and institutional theory to the EMA model and shows the pressures from stakeholders and institutions reassuring the manufacturing firms to implement EMA. This research evidences that EMA enhances EP and FP.Originality/valueThe policymakers, regulators and government can consider these findings to formulate policy regarding companies’ EP and FP. Particularly, company executives can focus on KM, EIS, green innovation and EE factors for EP and FP.

The role and perception of accountants on environmental management accounting in an emerging market: Study on South Africa’s companies.

This research explores the role and views of accountants in environmental management accounting (EMA) and environmental performance. The study relied on a survey of 86 chief finance officers, accountants and finance managers from the top 40 listed South African companies. The chief finance officers, accountants and finance managers confess that they lack understanding on in what way environmental issues can be incorporated into EMA. In addition, the professionals disclose that EMA has not had an ample consideration by their companies. This suggests that a limited involvement by the accountants in EMA in South Africa exists. Hence, the sampled chief finance officers, accountants and finance managers indicated that they are not sure of their potential responsibility. This shows that South African accountants are noticeably absent from participating in EMA. This has been ascribed to EMA being a new branch of accounting, their little aptitude in environmental issues and also the voluntary nature bestowed on EMA practices. Therefore, this paper will increase literature on the views of accountants on EMA from a developing country’s perspective.

Peran Akuntansi Manajemen Lingkungan dalam Memediasi Inovasi Ramah Lingkungan pada Nilai Perusahaan Terhadap Perusahaan di BEI

This research is about the role of environmental management accounting in mediating green innovation by using CSR disclosure on firm value. This study uses manufacturing companies in the basic and chemical industry sub-sectors listed on the IDX in 2017 – 2019 because these sub-sectors have a more significant influence on environmental pollution. The population of this study is manufacturing companies in the basic and chemical industry sectors listed on the Indonesia Stock Exchange in 2017-2019, totaling 71 companies and the research sample as many as 46 companies using the purposive sampling method. This study uses a quantitative method with a descriptive approach. The results show that green innovation affects environmental management accounting and directly affects firm value. Environmental management accounting now has a significant influence on firm value. Environmental management accounting cannot mediate between green innovation and company value in basic and chemical industrial sector companies listed on the IDX.

Factors Affecting the Implementation of Environmental Management Accounting: A Case Study in Manufacturing Enterprises in Danang City

Sustainable development is an inevitable development trend of modern society, that is, a development that can meet the needs of the present without affecting the ability of future generations to meet their own needs. Therefore, in the 70s, environmental management accounting (EMA) has increasingly received the attention of authorities, enterprises, and researchers because this is a means for enterprises to balance business management and environmental sustainability. Thus, this study surveyed 321 chief accountants and managers working for 200 manufacturing enterprises in Da Nang, Vietnam. The study aims to determine the factors affecting EMA implementation and measure the influence of the factors on the implementation of EMA in manufacturing enterprises in Da Nang. This research uses a combination of qualitative research methods to identify influencing factors and quantitative research to measure the influence of factors on EMA implementation. Research results show five factors affecting EMA implementation: technology level, enterprise characteristics; performance pressure; accounting staff qualifications, and managers' awareness. Research on EMA in Vietnam is relatively new and has not been studied much. At the same time, there is currently no research on EMA in manufacturing enterprises in Da Nang city. Therefore, the study also contributes to the theoretical basis of the factors affecting EMA implementation.

Technology Industry Revolution 4.0 and Environmental Performance: The Mediating Role of Environmental Management Accounting

Objective - The study aims to examine the relationship between advanced technology in IR 4.0 and the implementation of Environmental Management Accounting (EMA) and its impact on environmental performance. The research also proposes the mediating effect of EMA that there is an indirect effect of technology IR4.0 and environmental performance through EMA. Methodology/Technique – Online survey questionnaires were used to collect data distributed to the managers of the Malaysian electrical and electronic companies which are members of the Electrical and Electronics Association of Malaysia (TEEAM). Data analysis was performed using Partial Least Squares (PLS) analysis for the hypotheses testing. Findings - The findings confirmed that advanced technology significantly and positively influenced EMA and environmental performance. EMA significantly and positively influenced environmental performance. Evidence of EMA as a mediator was identified in the relation between advanced technology and environmental performance. Novelty - Environmental data with inadequate credibility prevents management from making informed decisions. Technology IR 4.0 is a key to solving EMA issues, enhancing real-time environmental data, and improving the production process, thus leading to efficient environmental management and improved environmental performance. The study was conducted due to insufficient empirical evidence on the employment of IR 4.0 advanced technology in the use of EMA that leads to enhanced environmental performance. Type of Paper: Empirical. JEL Classification: Q50, Q55 Keywords: Environmental Management Accounting; Advanced Technology Industrial Revolution 4.0; Environmental Performance, Contingency Theory, Electrical Electronic Industry. Reference to this paper should be referred to as follows: Rasit, Z.A; Bahari, N.A.M; Urus, S.T; Ismail, A.H. (2022). Technology Industry Revolution 4.0 and Environmental Performance: The Mediating Role of Environmental Management Accounting, Acc. Fin. Review, 7(1), 62 – 78. https://doi.org/10.35609/afr.2022.7.1(3)

Analysis of Environmental Management Accounting Implementation in RSUD Dr. Saiful Anwar Malang

This review plans to examine the application of environmental management accounting (EMA) in RSUD Dr. Saiful Anwar Malang. It includes an analysis of the performance of RSUD Dr. Saiful Anwar Malang in terms of the environment, monetary information, and physical information of the application of EMA in hospitals. The examination method was descriptive qualitative. Information assortment procedures are perception, interviews, and documented information. The findings indicate that the hospital has implemented EMA based on the EMA framework) and environmental cost classification. In addition, the hospital has carried out waste management so well that there were no external costs. For the application of environmental accounting, the hospital has included environmental costs and general accounting theories and principles.

Linking Advanced Technology Industry 4.0 to Environmental Management Accounting (Ema): Impact on Environmental Performance

Sustainability has become vital today as stakeholders demand more information related to the company's environmental and social performance. In order to gather eco-efficient data, companies need to have a good infrastructure or appropriate system for data gathering and sharing in the supply chain. Prior researchers have discussed the use of environmental management accounting (EMA) as one of the tools that can provide environmental information that helps in dealing with environmental issues. Nevertheless, environmental information may not be shared effectively due to poor communication links and the inconsistency of information systems. The motivation to conduct this study is to examine factors that can be solutions to several challenges discovered by prior studies to effectively implementing EMA. Besides that, there are mixed discussions on previous research suggested examining factors that influence the EMA adoption to enhance environmental performance. One of the recent issues is the rise of advanced technology from the Fourth Industrial Revolution (Industry 4.0), which was discussed briefly in recent prior studies. Prior research highlighted advanced technology under Industry Revolution (IR) 4.0 might enhance environmental information. Therefore, the purpose of this study is to investigate the relationship of advanced technology Industry 4.0 on the adoption of EMA leads to the improved environmental performance of the Malaysian electrical and electronic industry. Keywords: Environmental management accounting (EMA), advanced technology Industry 4.0, industrial revolution 4.0, environmental performance

Developing an Environmental Management Accounting Framework for The Waste Management Sustainability of Municipalities in South Africa

The aim of the study is to identify environmental management accounting (EMA) practices currently used by the municipalities in South Africa in enhancing municipal solid waste management. To accomplish the aim of the study, 32 in-depth interviews were conducted with accountants, environmental managers and municipals managers on 10 municipalities in South Africa. Thematic analysis’s was used to analyse the data and unearthed that environmental management system, waste management system, environmental reporting, environmental training and research and development are currently used as EMA practices to boost municipal solid waste management. To align these practices with the accounting system in municipalities, an EMA model was proposed that can make available monetary and non-monetary waste-related environmental information.

Environmental Management Accounting (EMA) practices and plastic pollution control in selected food and beverage firms

This study investigated the relationship between EMA and plastic pollution control. The study concentrated on Food and Beverage manufacturing companies since they use plastic goods to package their products. Plastic products are discarded once they have served their purpose, which pollutes the environment. A quantitative approach was adopted, with 124 self-completed questionnaires being administered to financial managers, management accountants, factory accountants and chief accountants of 38 selected food and beverage manufacturing firms in Durban. The findings revealed a significant relationship between environmental information and environmentally-related activities. Environmental information also had a positive relationship with corporate environmental strategy. Moreover, a strong positive relationship was discovered between environmental information and plastic pollution control. An analysis of the link between environmentally-related activities and plastic pollution control revealed an insignificant relationship. An insignificant relationship was also discovered between corporate environmental strategy and plastic pollution control. This study suggests that companies within the Food and Beverage industry must put in place sustainable environmental strategies, whereby eco-friendly disposal initiatives must be implemented for plastic waste management.

Environmental Management Accounting in Malaysian Electrical and Electronic Manufacturing Industry

Environmental Management Accounting in Malaysian Electrical and Electronic Manufacturing Industry

Interpretive Structural Modelling (ISM) of Enablers Affecting Green Accounting in Indian Manufacturing Sector: A Conceptual Model

Green accounting is vital for every economy in the world. Indian manufacturing sectors are regarded as one of the most significant contributors to environmental and socioeconomic problems, and as a result, the country lacks global sustainability and progress. This paper focuses on how these industries can contribute to the sustainability of the environment. The paper aims to analyze how these industries can promote ecopreneurial behavior. Also, the researchers and expert opinions lead to a theoretical framework and conceptual model using a well-defined and explained literature review and the derived model to understand, observe, and analyze various environment awareness concerns. To gather the expert opinions, various calls and surveys were scheduled with chartered accountants, academicians, environmental experts, commerce people, to understand how the identified variables are influenced by each other. Environmental management accounting and green accounting came out as the most significant and vital factors. All the identified variables were complementing. Three levels came out for the model. The authors created an ISM on factors affecting green accounting in the Indian manufacturing sector, emphasizing the context and concept related to the discovered variables that have been tested in the real world.

The role of environmental management accounting and environmental knowledge management practices influence on environmental performance: mediated-moderated model

PurposeThis study aims to observe the influence of environmental management accounting (EMA) and environmental knowledge management (KM) practices on environmental performance with mediating role of top management support (TMS). Moreover, green work climate perception (GWCP) is used as a moderator between TMS and environmental performance.Design/methodology/approachPartial least square-structural equation modeling is used to test research hypotheses. Data was collected to distribute questionnaires in light of the purposive sampling technique; a total of 329 questionnaires were used for final analysis. This study is correlational and cross-sectional. Multiple regression analysis was used to see the influence of EMA, environmental KM practices, TMS and GWCP on environmental performance.FindingsThe results reveal that EMA, environmental KM practices and TMS are positively related to environmental performance. Moreover, TMS significantly mediates between EMA, environmental KM practices and environmental performance. GWCP is positively associated with environmental performance. Finally, GWCP significantly strengthens the positive relationship between TMS and environmental performance.Practical implicationsThis study highlighted a significant issue that of how top management uses EMA, environmental KM practices, TMS and GWCP in examining environmental performance. Moreover, this study covers the gap and supports top management to concentrate on exogenous variables to examine environmental performance.Originality/valueThis study adds value to literature to focus on factors that influence environmental performance. This initial research observes the influence of EMA and environmental KM practices on environmental performance with TMS as a mediator in light of the knowledge-based view. Besides, GWCP is used as a moderator between TMS and environmental performance. Finally, our research can provide benefits to researchers, students and managers.

A Systematic Review of Barriers in Adoption of Environmental Management Accounting in Chinese SMEs for Sustainable Performance.

Small- and medium-sized enterprises (SMEs) play an important role in sustainable development not only for their significant contribution to China's economy but also for their large share of total discharged pollutants. Despite the widely acknowledged importance and benefits of environmental management accounting (EMA), the level of adoption and implementation of EMA practice is still weak within SMEs in many countries, especially in China. The current systematic review aims to identify the barriers affecting the Chinese SMEs for adopting EMA practices along with the critical success factors required for adopting EMA practices by SMEs and their top management for ensuring sustainable corporate environmental performance in China. The study is carried out following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines. In total, 73 articles were found to be eligible to be included in the systematic review, which was published on EMA in small- and medium-sized enterprises in China. Our study aims to document barriers to the adoption of EMA among Chinese SMEs. The review concluded that strict legislation and the availability of flexible financing options for SMEs can promote the adoption of EMA by SMEs. The establishment of environmental reporting systems and auditing mechanisms can further increase the utilization of EMA by small and medium firms. Barriers to EMA adoption can be mitigated after careful consideration of the current situation in SMEs. Documentation of significant barriers may help to form supportive policies which ultimately add to the efforts toward climate change mitigation.

The Effect of Discontinuous and Unpredictable Environmental Change on Management Accounting During Organizational Crisis: A Field Study*

ABSTRACTThis study investigates whether and how organizations change their use of management accounting during crisis. The study is important because organizations regularly face significant challenges such as crisis during which the role of management accounting is not well understood. Based on interviews and observation in five private sector organizations and one in the public sector, I find that executives in organizations facing crisis due to a discontinuous and unpredictable environmental change leverage management accounting during the crisis. In contrast, executives in organizations facing crisis due to a continuous and predictable environmental change question the truth and value of their management accounting practices and, as a result, do not change their use of management accounting to manage the crisis. For those organizations that do leverage management accounting, I rely on conceptual and empirical insights from the literature examining the decision‐facilitating role of informal management accounting to examine how they adapt or develop new management accounting tools and practices to manage crisis. I find that executives first engage in a comprehensive review of their management accounting systems and reports to convince themselves that they can be relied on. Following this process, they leverage accounting to understand the past, develop metrics intended to reach all employees, and institute various forms of accountability to support the management of crisis. The use of these informal management accounting tools and practices enables organizations to develop a new language for understanding and managing crisis. The primary contribution of my study is that it conceptualizes and theorizes informal management accounting tools and practices as a mechanism that facilitates response to crisis. These tools and practices are low‐cost and easy to implement, which are favorable given the challenges associated with crisis.

EMA Implementation and Corporate Environmental Firm Performance: A Comparison of Institutional Pressures and Environmental Uncertainty

Environmental management accounting (EMA) practices guide a firm’s response to perceived environmental uncertainty (EU) and various institutional pressures (IP). Drawing upon institutional theory, this study explores the relative effects of institutional pressures and environmental uncertainty on the implementation of EMA, an environmental strategy (ES), and the resulting environmental performance (EP) of firms under the influence of top-management support (TMS) and perceived benefits (PB). Based on data collected from 243 firms operating in Suzhou, one of the busiest business hubs in China, this research used the structural equation modeling (SEM) technique. Findings reveal that environmental uncertainty exerts a stronger influence on the adoption of EMA practices than institutional pressures; however, the choice of a firm’s environmental strategy is more influenced by institutional pressures. Likewise, the serial-mediation effect of environmental strategy and EMA practices is observed to be the strongest in the case of coercive pressures, with some notable moderation effect for perceived benefits and top-management support. The study concludes with theoretical and managerial implications.

Towards an Environmental Sustainability Management Accounting Template

In the 1980s, a recognition of the growing significance of environmental sustainability saw a momentum of pressure to go beyond financial reporting to include non-financial reports, with a focus on corporate governance and sustainability matters (Larrinaga and Bebbington, 2021). That momentum stemmed from general references to sustainable development by the International Union for Conservation of Nature (1980), through to defined references in the Brundtland Report (World Commission on Environment and Development, 1987), initiatives from the International Federation of Accountants (IFAC 2005). Further work by the GRI - Global Reporting Initiative (1999, 2016), and successive COP summits led to the establishment of the International Sustainability Standards Board (November 2021) by the International Financial Reporting Standards (IFRS) Foundation, linked to the International Accounting Standards Board. Currently, on a voluntary basis, many companies disclose sustainability initiatives and results, often based on the framework and methodology issued by the GRI. In some localities, aspects are now compulsory (e.g., France, Sweden, Brazil, South Africa, UK). The reporting scope itself has evolved from, initially, the three pillars of people, planet, profit, wider scopes. The three evolved into four: human, social, economic and environmental, and then into five: people, planet, prosperity, peace and partnerships. The challenge to organisations is to identify what needs to be measured and how, and to be reported upon. This working paper explores how an organisation’s internal management accounting function can provide a template for that, and to good effect. As a base it draws upon the UNDSD (United Nations Division for Sustainable Development, 2001) recommendations that environmental management accounting should focus on identification, collection, analysis and use of two types of information for internal decision making: physical information on the use, flows and destinies of energy, water and materials (including wastes), and monetary information on environment-related costs, earnings and savings. It builds on that base by identifying an examining what organisations are currently reporting upon, and evaluating the strengths an weakness of such reports.

The Moderating Effect of Environmental Management Accounting Practices on the Relationship Between Green Supply Chain Management Practices and Corporate Performance of Egyptian Manufacturing Firms

The Moderating Effect of Environmental Management Accounting Practices on the Relationship Between Green Supply Chain Management Practices and Corporate Performance of Egyptian Manufacturing Firms