Exploring The Impact of Environmental ‎Accounting onCorporate Financial Performance: ‎An Indian Power Sector Perspective

  • Authors

    • Mangulu Charan Dash Research scholar, F.M. University, Odisha, India https://orcid.org/0000-0002-7613-414X
    • Dr. Pratap Chandra Sahoo Asst. Professor, Bhadrak (Auto) College, Odisha, India
    • Monalisa Panigrahi Lecturer in Commerce, Rayagada Autonomous College, Odisha, India https://orcid.org/0009-0004-8320-0434
    • Dr. Bamadeb Mishra Lecturer in Commerce, Prananath College (Autonomous), Khordha, Odisha, India
    https://doi.org/10.14419/wm2sa242

    Received date: August 14, 2025

    Accepted date: September 23, 2025

    Published date: October 19, 2025

  • Environmental Issues; Environmental Management; Environmental Costs; Sustainability

  • Abstract

    Environmental accounting is an important component of environmental, social, and ‎governance reporting since it encompasses the systematic tracking of expenses associated ‎with protecting natural resources. It offers both quantitative and qualitative insights that aid ‎organizations in making informed decisions regarding environmental management. This study ‎explores the connection between environmental cost and key financial parameters, namely ‎return on assets, return on equity, and return on capital employed, which are considered as ‎dependent factors, whereas environmental cost is treated as the independent factor for this ‎study. The sample size is selected from the top ten Indian power sector companies listed on ‎the BSE from 2019-20 to 2023-24 in terms of market capitalization. Data are analyzed by ‎using panel regression in SPSS version 26. The results indicate that environmental costs have ‎an insignificant impact on firm performance. Based on these findings, it is recommended that ‎companies develop effective strategies for managing environmental expenditures, which ‎could help enhance their public image and support long-term sustainability‎.

  • References

    1. Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052-5079. https://doi.org/10.1007/s10668-021-01649-w.
    2. Abdul Rahman SA, Yusoff R, Wan Mohamed WN (2020). Environmental disclosure and financial performance: An empirical study of Malaysia, Thailand and Singapore. Soc. Environ. Account. J. 29(2):46-58. https://doi.org/10.1080/0969160X.2009.9651811.
    3. Agarwal, B., Gautam, R. S., Jain, P., Rastogi, S., Bhimavarapu, V. M., & Singh, S. (2023). Impact of Environmental, Social, and Governance Ac-tivities on the Financial Performance of Indian Health Care Sector Firms: Using Competition as a Moderator. Journal of Risk and Financial Man-agement, 16(2), 109. https://doi.org/10.3390/jrfm16020109.
    4. Altarawneh, G. A. (2015). Current trends in the reporting of environmental information in the annual report of major industrial and mineral compa-nies in Jordan. Current Trends in the Reporting of Environmental Information, 7(8), 120-126.
    5. Al-Tuwaijri, S. A., Christensen, T. E., & Hughes Ii, K. E. (2004). The relations among environmental disclosure, environmental performance, and economic performance: a simultaneous equations approach. Accounting, organizations and society, 29(5-6), 447-471. https://doi.org/10.1016/S0361-3682(03)00032-1.
    6. Al-Waeli, A. J., Khalid, A. A., Ismail, Z., & Idan, H. Z. (2021). The Relationship between environmental disclosure and financial performance of industrial companies with using a new theory: Literature Review. Journal of Contemporary Issues in Business and Government Vol, 27(2).
    7. Athma, P., & Rajyalaxmi, N. (2017). Environmental accounting and reporting: A study of Maharatna companies. IUP Journal of Accounting Re-search & Audit Practices, 16(4), 7-18.
    8. Bassey, B. E., Effiok, S. O., & Eton, O. E. (2013). The impact of environmental accounting and reporting on organizational performance of select-ed oil and gas companies in Niger Delta Region of Nigeria. Research Journal of Finance and Accounting, 4(3), 57-73.
    9. Ben Ali, A., & Chouaibi, J. (2024). Mediating effect of ESG performance on executive incentive compensation-financial performance relationship: evidence from MENA banking sector. Corporate Governance: The International Journal of Business in Society, 24(2), 439-461. https://doi.org/10.1108/CG-02-2023-0065.
    10. Carreira, F., Damião, A., Abreu, R., & David, F. (2014, April). Environmental disclosure-from the accounting to the report perspective. In International Conference on Enterprise Information Systems (Vol. 2, pp. 496-501). SCITEPRESS. https://doi.org/10.5220/0004973604960501.
    11. Chouaibi, J., Benmansour, H., Ben Fatma, H., & Zouari-Hadiji, R. (2024). Does environmental, social, and governance performance affect financial risk disclosure? Evidence from European ESG companies. Competitiveness Review: An International Business Journal, 34(6), 1057-1076. https://doi.org/10.1108/CR-07-2023-0181.
    12. Connelly, J. T., & Limpaphayom, P. (2004). Environmental reporting and firm performance: evidence from Thailand. Journal of Corporate Citizen-ship, (13), 137-149. https://doi.org/10.9774/GLEAF.4700.2004.sp.000015.
    13. Enahoro, J. A. (2009). Design and Bases of Environmrntal Accounting in Oil & Gas and Manufacturing Sector in Nigeria (Doctoral dissertation, Covenant University).
    14. Environment Impact assessment Notification, 1994; 1998.
    15. Environment Protection, Rules, 1986.
    16. Hamdouni, A. (2025). Value Creation Through Environmental, Social, and Governance (ESG) Disclosures. Journal of Risk and Financial Manage-ment, 18(8), 415. https://doi.org/10.3390/jrfm18080415.
    17. Hamilton, K. (2016). Measuring sustainability in the UN system of environmental-economic accounting. Environmental and Resource Econom-ics, 64(1), 25-36. https://doi.org/10.1007/s10640-015-9924-y.
    18. Iatridis, G. E. (2013). Environmental disclosure quality: Evidence on environmental performance, corporate governance and value rele-vance. Emerging Markets Review, 14, 55-75. https://doi.org/10.1016/j.ememar.2012.11.003.
    19. Jaggi, B., & Freedman, M. (1992). An examination of the impact of pollution performance on economic and market performance: pulp and paper firms. Journal of business finance & accounting, 19(5). https://doi.org/10.1111/j.1468-5957.1992.tb00652.x.
    20. Japee, g. P. Impact of environmental accounting and disclosure practices on shareholder’s value creation of selected indian corporates.
    21. Kalola, R. (2021). An analysis of environmental accounting and firm profitability of reliance industry limited. Research Guru, 14(4), 1-8.
    22. Khandelwal, A., & Chaturvedi, A. (2021). Environmental accounting disclosures and financial performance in India. Recent Advances in Fields of Accounting, Finance and Management. https://doi.org/10.2139/ssrn.3842705.
    23. Li, L. (2015). The Sustainability of Accounting Practices: Institutional Problems in Current Chinese Environmental Accounting. The International Journal of Interdisciplinary Organizational Studies, 10(4), 17. https://doi.org/10.18848/2324-7649/CGP/v10i04/53408.
    24. Makori, D. M., & Jagongo, A. (2013). Environmental accounting and firm profitability: An empirical analysis of selected firms listed in Bombay stock exchange, India. International Journal of Humanities and Social Science, 3(18), 248-256.
    25. Meek, G. K., Roberts, C. B., & Gray, S. J. (1995). Factors influencing voluntary annual report disclosures by US, UK and continental European multinational corporations. Journal of international business studies, 26(3), 555-572. https://doi.org/10.1057/palgrave.jibs.8490186.
    26. Moid, S. (2017). Environmental Accounting an Analysis of Indian Corporate Sector. Journal of Management Research, 17(3), 163-174.
    27. Nandini, E. S., Sudharani, R., & Suresh, N. (2020). A Study on Impact of Environmental Accounting on Profitability of Companies listed in Bom-bay Stock Exchange. Bulletin Monumental, 21(08), 46-51.
    28. Omnamasivaya, B., & Prasad, M. S. V. (2016). Factors influencing environmental accounting and disclosure practices in India: Empirical evidence from NIFTY companies. IUP Journal of Accounting Research & Audit Practices, 15(1), 21. https://doi.org/10.1504/AJESD.2017.082801.
    29. Prevention and Control of Pollution Rules,1975; 1978. https://doi.org/10.7901/2169-3358-1975-1-177.
    30. Qiu, Y., Shaukat, A., & Tharyan, R. (2016). Environmental and social disclosures: Link with corporate financial performance. The British Account-ing Review, 48(1), 102-116. https://doi.org/10.1016/j.bar.2014.10.007.

  • Downloads

  • How to Cite

    Dash , M. C. ., Sahoo , D. P. C. ., Panigrahi , M. ., & Mishra , D. B. . (2025). Exploring The Impact of Environmental ‎Accounting onCorporate Financial Performance: ‎An Indian Power Sector Perspective. International Journal of Accounting and Economics Studies, 12(6), 738-744. https://doi.org/10.14419/wm2sa242