Green Capitalism: Environmental Accounting

1 Green Capitalism: Environmental Accounting Introduction As modern societies become increasingly aware of the impacts of their operations on the environment, they seek significant shifts in the way organizations think about a viable and sustainable future. In recent years, corporations are increasingly embracing environmental concerns as part of their corporate agenda as a mainstream part of management. Corporate environmentalism entails environmentally beneficial action that corporates undertake and goes beyond what is required under the law. Corporate environmentalism benefits society as a whole and is considered part of corporate social responsibility (CSR) by organizations (Amir & Chaudhry, 2019, p. 850).

The concept of corporate environmentalism advances the sustainability discourse, and the elements addressed include greenwashing and corporate social responsibility (ESG) environmental accounting, pricing of environmental services or externalities, and investment.

Environmental accounting is one focus area of corporate environmentalism and is a practice that identifies resource use, measurement, and communication cost of the organization's economic impact on the environment.

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The implementation of environmental accounting as a means of promoting organizational sustainability is analyzed, and the paper offers an interpretive framework upon which the practice can be implemented to promote organizational performance.

Companies adopting corporate environmental strategy as part of their corporate structure and this includes a set of initiatives that mitigate the impact of a company's activities in the natural environment through products, services, processes, and policies aimed at promoting environmental sustainability (Amir & Chaudhry, 2019, p. 852). Some of the environmental policies entail reducing energy consumption and waste generation, end implementing environmental management systems. The context of sustainability performance for businesses reveals the position that organizational performance is largely influenced by sustainable development. Therefore, many cultural, administrative, and social factors influence the performance of organizations.

One significant sustainability practice that businesses are increasingly adopting is environmental accounting. The practice of environmental accounting, also known as green accounting, refers to the modification of an organization's accounts to incorporate the use or sustainable use of natural resources. As businesses operate in a dynamic and competitive setting, environmental accounting is being adopted as a vital tool to assist in the management of environmental as well as operational costs of natural resources. In terms of cost-benefit analysis, environmental accounting entails the valuation of natural resources for effective business operations (Marrone et al., 2020, p. 2168). Environmental accounting practices are focused on the CSR and stakeholder theory, whereby businesses are embracing sustainable development goals as part of their competitive advantage. Accounting for the ecosystem is aimed at promoting

3 sustainable businesses that are highly conscious of how the operations of the business in terms of the impact of the economic aspects on the enterprise.

The limited contribution of traditional accounting practices at the point of sustainability has led to a debate on the implementation of sustainable accounting on organizational performance. Therefore, accounting has assumed a new role outside the existing functions. There is an increase in the analysis of the role of environmental accounting in the promotion of sustainable organizations (Metin et al., 2020, p. 22). As asserted by Amir and Chaudhry (2019), environmental management accounting emphasizes a special position on environment performance assessed by physical, qualitative, or non-financial criteria in sustainability.

Environment-oriented management accounting focuses on the integration of social, environmental, and economic facets of the processes of the organization. Particularly, environmental management accounting has been incorporated as a means by which the business community can manage its environment and related economic performance.

When implementing environment accounting, a major consideration should be how specific corporate practices seem like they will have significant environmental benefits.

According to Amir and Chaudhry (2019), there is a strong correlation between a company's environmental strategy and a company's performance. Sustainable accounting approaches provide information that is used by corporate management to achieve environmental improvement. Organizational processes are confronted with various risks, thus environmental accounting is adopted as an approach to foster risk management to protect the environment and businesses by maximizing predictability, with unforeseen events that are likely to affect the business is easily managed. To manage these risks, businesses adopt various tools for sustainability performance. In this direction, Amir and Chaudhry (2019) argue that information-

4 centric environmental, management accounting practices have the ability to reduce strategic uncertainties and risks that may hinder business sustainability.

From the standpoint of an investor who cares about environmental issues, environment accounting makes sense in terms of creating sustainability for the business. Sustainability accounting has also been approached from a context of "eco-control" in the sense that financial and strategic control methods to environment management are applied in the organizational operations. Environmental budgeting and planning concepts are also embodied in sustainable accounting to foster more sustainability in businesses. For businesses that strive to build a positive impression and reputation among consumers, and this is likely to create a favorable setting for the business to thrive and grow (Metin, 2020, p.23). When the business has created a positive image as an enterprise that upholds its CSR mandate, there is likely to be a high level of appeal to stakeholders, and this will guarantee the growth and enhanced performance of the venture.

Environment protection initiatives are considered as a tool to help organizations gain a competitive advantage and improve their overall performance. In this effect, the environment is adopted in compliance with the sustainability objective of accounting technologies. Based on this aspect, organizations are increasingly adopting accounting technologies with an integrated algorithm to evaluate the impact of economics on environmental metrics protection.

Sustainability has been governed by the need to extensively ensure control and protection of natural resources and reduction of business practices on environmental impacts (Ng, 2018, p.589). Therefore, management accounting is considered as a mechanism for achieving sustainability and contributing to environmental protection. Nonetheless, the adoption of environmental accounting by businesses is based on legal obligations, but companies strive to go

5 beyond the legal requirements as part of their corporate social responsibility as part of their mandate to positively impact the environment.

As businesses continue to realize the essence of sustainability practices in securing the future of the business, businesses are increasingly adopting environmental management accounting and the practice continues to receive enhanced consideration in the current competitive business context. Environmental management accounting is adopted as a branch of conventional management accounting and is established as feedback to the sustainability issues confronted by the traditional management accounting schemes in linking business activities with conservational actions (Marrone, 2020, p.2169). The is extensive ecological influence and associated expenditure such as the letdown of conventional accounting procedures that necessitate the need for businesses to the adoption of sustainable environmental accounting practices Environment management accounting has been driven by a corporate environment necessitated by the self-governing zone of case information and governing system to attain sustainability. Specifically, environmental accounting management has been recognized as a technique through which the business community can easily implement ecological and related monetary accomplishment (Amir & Chaudhry, 2019). The approach is effective in enabling managers to subsidize their practices in terms of promoting sustainability. Similarly, sustainable accounting practices enables businesses to positively contribute to a sustainable society. As more and more businesses adopt the practice, environmental management accounting is considered a key strategic approach for businesses to enhance their ecological execution. Largely, sustainable accounting can support businesses to address impending ecological and social burden as well as

6 building the credentials of promoting a reputable business that meets and goes beyond attaining its CSR mandate.

Various studies indicate that businesses are not keen on disclosing their sustainability performance, and therefore they are distracted by environmental management accounting (Metin, 2020; Ng, 2018). Aspects hindering the implementation of sustainable accounting in businesses include the inability of businesses to deal with the conservation of natural resources, the implicated costs of most environmental accounting schemes, as well as the prevalence of economic crises that negatively impact the desired level of adoption and effectiveness of environmental management accounting practices. Whereas environmental management accounting has been moderately adopted across organizations, businesses are struggling to balance their economic activities and the protection of the environment.

Whereas corporate environmentalism is being increasingly adopted across the business as a way of promoting sustainability. Indeed, sustainability can only be attained amid a thriving political ecology, which concerns the correlation between political, environmental, and ecological phenomena. Political ecology impacts the success of environmental accounting in terms of laying out policies and legislation that serves as a framework for sustainable accounting implementation. A positive political ecology can be used to promote sustainable accounting practices in terms of informing policymakers and organizations to address the complexities surrounding the environment and development, therefore contributing to better accounting practices (Marrone et al., 2020, 2173). Furthermore, political ecology facilitates understanding of the decisions that organizations make in terms of the political environment to address the economic pressure and social restrictions in place to govern accounting practices. Besides, political ecology facilitates looking at how different environmental practices affect the

7 environment, especially where government policies have been put into place to govern accounting practices.

Conclusion In conclusion, environmental management accounting practices are tools available for firms to realize their financial and performance in a significantly positive direction. As outlined, organizations have recorded significant improvement in the effectiveness and development of their accounting systems to be focused on a sustainable approach to enhance the performance of the business. Environmental management accounting has been established as significantly shaping business investment and decision-making. Having highlighted the advantages of environmental management accounting in promoting business performance managers and accounting practitioners should embrace the approach to promote business growth and future sustainability. The adoption of environmental accounting management should be adopted as part of the organization's corporate strategy. However, implementing an environmental management accounting system should not be adopted within the accounting department, but sustainability should be embraced across all departments to realize better performance and business growth.

On the other hand, government agencies should formulate policies and legislation to guide firms on implementing environmental management accounting to promote business performance and sustainability.

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References Amir, M., & Chaudhry, N. I. (2019). Linking environmental strategy to firm performance: A sequential mediation model via environmental management accounting and top management commitment. Pakistan Journal of Commerce and Social Sciences (PJCSS), 13(4), 849867.

Marrone, M., Linnenluecke, M. K., Richardson, G., & Smith, T. (2020). Trends in environmental accounting research within and outside of the accounting discipline. Accounting, Auditing & Accountability Journal, 33 (8), 2167-2193. https://doi.org/10.1108/AAAJ-03-2020-4457 Metin, U. Y. A. R. (2020). The Association Between Environmental Strategies and Sustainability Performance in the Context of Environmental Management Accounting. Ege Akademik Bakış Dergisi, 20(1), 21-41.

Ng, A. W. (2018). From sustainability accounting to a green financing system: Institutional legitimacy and market heterogeneity in a global financial center. Journal of Cleaner Production, 195, 585-592.

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