Implications of Environmental Accounting Practices on Sustainable Value Creation through the Mediator Role of Responsive Environmental Dynamism

Abstract

Traditional business reporting has focused on economic metrics for decades, often neglecting environmental and societal considerations. This study addresses this gap by investigating the implications of ecological accounting practices in creating a sustainable value that integrates environmental, economic, and societal dimensions. It incorporates the Theory of Planned Behavior to explore the factors influencing the adoption of environmental accounting practices and examines the role of Responsive Environmental Dynamism (RED) as a mediator in this relationship. The research employs a measurement model encompassing various aspects of environmental accounting, including environmental management accounting, cost accounting, external reporting practices, auditing practices, accounting information systems, and reporting responsibilities. Data were collected via a self-administered Likert scale questionnaire distributed to accounting practitioners using a snowball sampling technique. A total of 122 responses were analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings indicate that environmental accounting practices significantly impact sustainable value creation, with RED serving as a significant moderating variable. Notably, environmental external reporting and environmental auditing practices are identified as major contributors to sustainable value creation. The study underscores the need for businesses to integrate environmental accounting practices into their financial reporting frameworks to enhance long-term economic benefits, ensure legitimacy, and improve resource efficiency. This research contributes to the development of environmental accounting theory and practice, addressing existing deficiencies and fragmentation in the literature.