The Effect of Green Accounting Implementation, Environmental Costs, and Environmental Performance on Financial Performance

Abstract

This study investigates the impact of green accounting implementation, environmental costs, and environmental performance on the financial performance of energy sector companies listed on the Indonesia Stock Exchange during the period 2019–2023. The research employs a quantitative approach utilizing panel data regression analysis with three models: Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM). The sample consists of energy companies selected through purposive sampling based on predetermined criteria. The findings reveal that green accounting practices have a significant positive effect on financial performance, indicating that environmentally conscious financial practices contribute to improved profitability. Conversely, environmental costs demonstrate a significant negative effect, suggesting that higher environmental expenditures may burden company finances in the short term. Meanwhile, environmental performance does not show a significant effect on financial performance, implying that environmental efforts alone may not directly translate into financial gains without strategic integration. These results contribute to the understanding of the complex relationship between environmental management practices and corporate financial outcomes, particularly in the energy sector.