The Implementation of Environmental Management Accounting and Environmental Reporting Practices: A Social Issue Life Cycle Perspective

Abstract

Abstract-While the pressure of legitimacy was found to greatly influence companies' environmental reporting (ER) practices, being environmentally responsible however is not necessarily reflected through positive and descriptive environmental information. Unless companies begin to truly commit to upholding environmentally responsible, that is, to be accountable towards their business environmental impacts, the issue of incompleteness and incredibility of ER will remain topical. For companies to effectively measure and report their environmental performance, the implementation of Environmental Management Accounting (EMA) is essential as conventional accounting systems disregard the generation of environmental information. Using social issue life cycle theory as an interpretive lens, this paper aims to propose a theoretical framework to investigate the relationship between the extent of EMA implementation and ER practices.

Environmental management accounting, board role performance, company characteristics and environmental performance disclosure

“…Thus, results suggest that when physical and monetary environmental information is captured and environmental costs are properly classified and allocated by management, manufacturing firms are highly likely to disclose their environmental performance information to stakeholders. Consistent with Mokhtar et al (2014), this suggests that EMA makes and enhances the availability of relevant environmental information for reporting purposes.…”

“…Few studies are suggestive of a relationship between EMA and EPD (Mokhtar et al, 2014;Smit and Kotzee, 2016;Burritt et al, 2002). For example, Mokhtar et al (2014) suggest that, as companies seek to become more responsive and prudent towards environmental concerns, the integration of environmental information into business decision-making allows for a more efficient environmental and economic decision-making which potentially enhances the availability of relevant environmental information for reporting purposes. In rooting for EMA's implementation, Burritt et al (2002) argue that EMA solves environmental issues given the deficiency of conventional accounting practices to capture environmental information.…”

Environmental Management Accounting Practices: A Review of the Literature

“…Apart from that, companies' staff were also lacking in knowledge to structure related EMA procedures (Asiri et al, 2020;Doorasamy, 2015;Dumitru, 2018;Mokhtar et al, 2016), size of the organisation (Le & Nguyen, 2019). Finally, poor documentation was a reason for not implementing EMA (Mokhtar et al, 2015). Poor documentation was found to be partly barriers of EMA implementation as environmental related documentation were unavailable to support managerial evaluations.…”

Integrated Management System And Corporate Sustainability Performance: Stakeholders Theory Perspective

“…Irrefutably, stakeholders expect data to guide and help their financial navigation, subsequently, the detailed environmental information that isn't finished may hurt the reliability of environmental reporting as a medium to report companies' environmental performance (Mokhtar et al, 2015). Besides, the theory undertakes that stakeholder engagements can improve environmental protection, and economic performance (Latif et al, 2020).…”