Corporate Environmental Performance and Environmental Management Accounting Systems

Controversial environmental issues are highly challenged topics in the business world. In recent years, customers and other stakeholders have become more concerned with an organization’s accomplishments regarding overall performance, not merely making progress in an organizational context. They evaluate the organization’s contribution to building a sustainable society. In order to handle carbon emissions and climate change, critical undertakings such as environmental preservation and environmentally aware actions are an integral part of the overall strategy. Environmental management accounting (EMA) is, therefore, essential in creating a situation in which the organization handles various environmental problems proactively. To that end, the organization has developed environmental hazard and opportunity assessment techniques. These functions are used to scan the external and internal environments for threats to the environment and to intervene to respond to any conditions that may be problematic. EMA attempts to incorporate conventional management accounting perspectives within the environmental context. EMA provides a set of elements that can be the cornerstone for management to achieve the paramount goal of sustainable development. Based on organizational-level data of Italian listed firms, this work explores the role played by environmental management accounting practices, the effect of distinct aspects of governance dedicated to the environment in improving corporate environmental performance, and the extent of environmental disclosure. After the introductory chapter, specifically in the second chapter, we outline the conceptualization and evolution of corporate environmental performance. Then, we discuss the measurements of corporate environmental performance and apprehend the effect on the disclosure practices in the literature. Moreover, we emphasize the purpose and implication of environmental performance measurement systems. Afterward, we highlight the overlaps between environmental accounting and corporate accountability. In Chap. 3, we described the concept of environmental management accounting, outlining the evolution of EMA, the main tools, and the consequences of adoption as an innovative tool for the organization to keep pace with the demand for environmental protection worldwide. Understanding the consequences of these EMA in managing its environmental matters. In Chap. 4 (The relationship between environmental management accounting, environmental disclosure, governance, and corporate environmental performance: Some empirical evidence from Italy), we examine the mediating and moderating effect of EMA on the association between environmental governance and environmental performance. To this aim, we sampled 70 FTSE (100) firms listed on the Italian Stock Exchange from 2017 to 2021, considering the implementation of the Italian Legislative Decree 254/2016. The study period has witnessed unprecedented challenges to the global economy and the increasing tendency toward environmental regulations and sustainability initiatives. Drawing on the natural resource-based view and stakeholder theory, we provide the following findings. First, we evidence a positive and significant association between environmental governance and corporate environmental performance. Second, we show that environmental management accounting positively and significantly moderates and fully mediates the relationship between environmental governance and corporate environmental performance. The results confirm the potential moderating role of environmental management accounting, showing greater accountability and overseeing stakeholders' perceptions in improving the underlying relationship between environmental governance and corporate environmental performance. In addition, this study enriches the debate over the costs and benefits of environmental management system implementation, such as environmental management accounting in providing information on environmental costs, which are helpful for the management in monitoring firms’ financial and environmental performance. Our findings have important implications for environmentalists, policy-makers, and regulators. Indeed, these findings may guide boards in various decision settings to minimize environmental risk and imply environmental protection practices toward the green expanse.