Factors affecting environmental management accounting and environmental performance: An empirical assessment

Abstract

In today’s world, businesses have no apparent geographical boundaries for functioning, trading and delivering products and services. However, given the threats to environmental sustainability, modern businesses are restricted to adopt several environmental policies to operate in existing the present globalized ecosphere. Thus, the present study aims to examine the relationship between internal and external drivers of environmental management accounting (EMA). In doing so, the study seeks out the association of customer influence (CIN), regulatory pressure (RPR) and firm’s moral and social responsibility (MSR) on environmental management systems in the Indonesian manufacturing industry. Moreover, the current study is also motivated to investigate the impact of EMA on a firm’s environmental performance (ENP). The current study applied a partial least square structural equation modelling. The results of PLS-SEM confirm that all variables have a positive and significant impact on ENP. The results conclude that CIN, RPR, and MSR have a positive and significant contributor in enhancing EMA system. Moreover, the results further confirm that EMA system also plays a significant role in boosting the ENP in Indonesia. Therefore, the current study recommends SMEs to give more focus on enhancing the MSR among its employees and also make a good control over the regulation and CIN.