Environmental and Financial Management in Sustainable Business: A Case Study in the Energy Industry

Abstract

Sustainable business practices have become paramount in the contemporary global economy, urging companies to balance financial prosperity with environmental responsibility. In this context, the energy industry in West Java, Indonesia, serves as a compelling case study due to its significance in the region's economic development and its simultaneous environmental challenges. This research employs a qualitative case study approach to investigate the complex interplay between environmental and financial management within the West Java energy sector. Through semi-structured interviews, document analysis, and surveys, the study assesses environmental management practices, financial performance, and sustainable business models. The findings reveal a growing commitment to clean technologies, emissions reduction, and transparency among energy companies. Moreover, sustainable energy businesses exhibit competitive profitability, risk mitigation capabilities, and improved access to capital. Successful business models emphasize the integration of environmental and financial objectives and the importance of stakeholder engagement. These findings underscore the significance of aligning environmental and financial management for sustainable business in the energy industry and offer valuable insights for policymakers and industry practitioners seeking to navigate the intricate terrain of sustainability.

Environmental costing and sustainable accounting: A comprehensive review: Delving into methods of accounting for environmental impacts in financial statements

“…Similarly, Afiat et al (2023) delve into the interplay between environmental and financial management in the energy industry. Their case study in the West Java energy sector demonstrates how sustainable business models that integrate environmental and financial objectives can lead to competitive profitability, risk mitigation, and improved access to capital.…”

“…This study is particularly relevant as it showcases the practical application of environmental costing in a sector that is both economically significant and environmentally sensitive. The findings from Afiat et al (2023) suggest that companies that commit to sustainable practices, including the adoption of clean technologies and emissions reduction, can achieve financial prosperity while also fulfilling their environmental responsibilities.…”

“…In summary, the emergence of environmental costing in modern business practices is a response to the growing awareness of environmental issues and their impact on business sustainability. The integration of environmental considerations into financial reporting, as evidenced by the studies of Selvaraj (2023), Afiat et al (2023), and Sianipar, Lindrianasari, and Syaipudin (2023), demonstrates a shift towards a more holistic approach to business management. This approach not only addresses the immediate financial concerns of a company but also considers the long-term environmental and social implications of business operations.…”

Sustainability Practices in MSMEs: A Quantitative Analysis of the Impact of Green Supply Chain Management, Consumer Awareness, and Regulatory Compliance on Market Performance

“…Finally, the market performance of sustainable MSMEs appears to be positively impacted by GSCM practices. For instance, a study on the energy industry in West Java found that sustainable businesses exhibit competitive profitability, risk mitigation capabilities, and improved access to capital [13]. Another study found that market orientation, which involves focusing on the needs and wants of the market, is a significant stimulant of firm performance [14].…”