The Effects of Climate Change Policy on the Business Community: A Corporate Environmental Accounting Perspective

Abstract

This paper proposes a normative framework to explain the influence of climate change policy on corporate environmental strategies, and at the same time describes how these strategies could be translated into an integrated environmental accounting model based on formal accounting statements. In particular, it aims to demonstrate a new approach of climate change accounting in order to overcome some important weaknesses of previous environmental accounting methods, such as accuracy and reliability. Currently, the majority of existing accounting methods record information on climate change on a voluntary basis. Even though they may assist businesses in designing essential environmental strategies and help public policy entities improve their knowledge on the results of such strategies, the informal nature of the accounting standards and the variable type of financial and non-financial information make the use of such models untrustworthy and complicated. Finally, an empirical example of this framework is also presented.

Determinants and Characteristics of Korean Companies’ Carbon Management under the Carbon Pricing Scheme

“…The development of reporting mechanisms for GHG is related to a company's accounting system, since a numerical approach helps firms disclose more credible information. In this connection, Stechemesser and Guenther (2012) [8] provided a systematic literature review of carbon accounting, while Evangelinos et al, (2015) [9] studied accounting methods used; Schaltegger and Csutora (2012) [34] studies applications and methods; and Bebbington and Larrinaga-González (2008) [7] studies problems with the valuation of pollution allowances and their identification as assets.…”

“…For ETS companies, meeting emissions allocation through carbon management may be a strategy that takes into account external impressions rather than being based on rationalization of the cost of greenhouse gas mitigation, due to the relatively lower scores given for production cost reduction (3.44), carbon reduction cost reduction (3.41), and cost effectiveness as means to increase profits (3.00) in this phase. In actuality, EU ETS companies are concerned that the allocation shortfalls are negatively associated with a firm's valuation [9]. Meanwhile, given the statistical result of importance of stakeholders in company carbon management in the above Section 4.5.1, it is likely that the government is considered the chief determining body of a company's external reputation, as opposed to the general public, environmental NGOs, and peers in the same sector that are implied by the question.…”

“…Several studies on corporate carbon management have been made, which cover definitions thereof [2]; carbon strategies and management practices [3][4][5][6]; carbon disclosure and accounting [7][8][9]; drivers and challenges [5,[10][11][12]; stakeholder pressures [1,13,14]; outputs of low-carbon operations on economic performance [10,15]; and GHG emissions [16] and energy efficiency [17].…”

Assessing the Effects of Climate Change Regulations on the Business Community: A System Dynamic Approach

“…The main goal of these policies is to facilitate and encourage businesses to adopt suitable management practices and technologies so as to mitigate their effects on climate change by adapting their operational and production processes to the new requirements (Hall, ; Verchot et al , ). The climate change policy tools could be classified in three general categories (Evangelinos et al , ): (a) command and control instruments (e.g. 2008 UK Climate Change Act), (b) market‐based instruments (e.g.…”

“…green intellectual capital, organizational culture and corporate profile). Moreover, the above benefits have positive effects on corporate financial indicators such as profits, revenue and cost (Hoffman, ; Evangelinos et al , ). In this context, the majority of empirical studies mainly focus on the evaluation of business climate change performance (Weinhofer and Hoffmann, ) and on the assessment of the relationships between financial goals and corporate climate change performance (Busch and Hoffmann, ; Delmas et al , ).…”