Effect of Environmental Accounting and Reporting on Financial Performance: Evidence from DSE Listed Fuel and Power Sector Companies
DOI:
https://doi.org/10.64102/rujssbs.0476Keywords:
Environmental accounting, environmental reporting, environmental sustainability, climate change, mitigation approachesAbstract
Globally, Bangladesh is considered one of the most climate-vulnerable countries. Subsequently, this study aimed to find out how environmental accounting and reporting (EAR) is performed by the 23 companies listed on the Dhaka Stock Exchange (DSE) in the fuel and power sector. Additionally, the study assessed the association between the performance of the Environmental Accounting and Reporting Practices Index for Fuel and Power Industry (EARPIFPI) and selected financial performance indicators. The authors developed a self-constructed index, EARPIFPI, to measure the degree of EAR practices of the companies. The findings of the study indicate that the performance of EAR practices is abysmal and disappointing, ranging from 0 to 38 (according to pre-developed index items). Out of twenty three companies, seven companies reported no issues regarding EAR practices, indicating an inclination to achieve lower disclosures and reporting practices. Of the fifteen companies reported four had less than five index items, three from five to ten and six with eleven to twenty while two exceeded thirty. The variety of reporting practices and settings highlights the need for a mandatory regularity framework in Bangladesh. In addition, EAR is also found to have a statistically significant effect on financial performance measure such as net profit after tax (NPAT), earnings per share (EPS), net assets par value share (NAVP), return on equity (ROE) and return on assets (ROA). The study will eventually help the government of Bangladesh to promulgate regulations for companies against EAR practices related to climate change, environmental protection and environmental sustainability.
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