The study was conducted toexamine and evaluate variables affecting environmental performance by examining the role of environmental management accounting of businesses in Vietnam.. Throu
Background
The relationship between environment and development is crucial, as the environment serves as both a resource and a space for growth Economic development often leads to increased pollution, with the establishment of more factories resulting in higher emissions and dust levels, particularly in developed nations This environmental degradation ultimately impacts human quality of life Thus, it is essential to implement measures that ensure a balance between economic growth and environmental protection during the development process.
Since 2020, Vietnam's development strategy has focused on rapid and sustainable economic growth while prioritizing environmental protection and addressing economic, environmental, and social challenges Legal regulations mandate that businesses and investors conduct environmental impact assessments and propose effective treatment solutions prior to project implementation As global business trends evolve in response to competitive pressures, it has become essential for companies not only to pursue profits and competitive advantages but also to take responsibility for their environmental impacts.
In today's competitive business landscape, simply achieving profitability and a competitive edge is insufficient; companies must also address their environmental responsibilities Environmental accounting has emerged as a vital tool for recognizing sustainable practices within organizations (Christ and Burritt, 2015; Schaltegger and Csutora, 2012) As stakeholders increasingly demand accountability, managers are urged to prioritize environmental concerns and incorporate them into performance evaluations (Bennet et al., 2003; Rodrigue et al., 2013).
Implementing environmental strategies and utilizing environmental management accounting (EMA) can give companies a competitive edge Environmental accounting encompasses the management of financial, physical, and qualitative data related to environmental reporting and accountability.
An ecologically sustainable organization depends on the commitment of senior management, which enhances competitiveness, as noted by Spencer et al (2013) To achieve exceptional environmental performance, it is essential to have top management's dedication, integrated planning, and the implementation of environmental management accounting (EMA) However, there has been limited research examining these connections, particularly in rapidly developing economies such as Indonesia, highlighting the need for further investigation into the country's sustainability practices (Chapple and Moon).
2005) That is why we choose the issue: " Investigate factors affecting environmental performance: the role of environmental management accounting "
This research seeks to fill the gap in empirical evidence regarding the effectiveness of Environmental Management Accounting (EMA) in enhancing a company's environmental performance While earlier studies have predominantly concentrated on corporate social disclosure and the influence of eco-efficiency on firm performance, this investigation aims to provide insights into the relationship between EMA and environmental outcomes.
Research objectives
• This article first examines and assesses the influence of variables on environmental management accounting.
• The second objective is to examine and assess how environmental management accounting affects environmental performance.
• Additionally, it suggests managerial implications to enhance the use of environmental management accounting and boost companies' environmental performance.
Research questions
• What elements affect environmental management accounting?
• What impact do those variables have on environmental management accounting?
• What effects does environmental management accounting have on environmental performance?
A survey conducted in Ho Chi Minh City, Vietnam's economic hub, aimed to assess the influence of various factors on environmental management accounting The research, which spanned from December 2023 to early January 2024, focused on quantifying this impact and evaluating how environmental management accounting contributes to environmental performance The study specifically targeted accounting and auditing professionals for their insights.
Ho Chi Minh City-based businesses.
This paper employs quantitative research methodologies to address a identified research gap through a review of existing literature and the introduction of a novel theoretical research model Data for the study is collected via a convenient sampling approach using a Google Form questionnaire Subsequently, the gathered data is analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the proposed scale and model.
CHAPTER 1: THEORETICAL BACKGROUND 1.1 The natural resource-based view (NRBV)
The resource-based view (RBV) posits that an organization's competitive advantage and performance hinge on its ability to leverage strategic resources that are valuable, scarce, and challenging for competitors to imitate By effectively utilizing these unique resources, businesses can achieve long-term superior performance and maintain a distinct advantage over rivals, as competitors find it difficult to replicate or substitute these resources for equivalent outcomes.
The Natural Resource-Based View (NRBV) theory, an evolved form of the Resource-Based View (RBV) theory, suggests that companies can achieve a sustainable competitive advantage by addressing environmental concerns (Hart, 1995) Hart highlights several limitations of RBV theory, particularly its neglect of the interplay between an organization and its natural environment This oversight, once justifiable, is now recognized as a critical factor in securing competitive advantages Effectively leveraging natural resources and minimizing pollution can lead to increased profitability (Hart and Dowell, 2011).
The Natural Resource-Based View (NRBV) encompasses three interconnected strategies: pollution control, product management, and sustainable development, each influenced by various environmental factors and leveraging distinct core resources for competitive advantage For instance, manufacturers can reduce pollution waste by streamlining processes and minimizing input materials (Hart & Dowell, 2011) Companies are increasingly adopting environmental monitoring systems to enhance their ecological performance; however, these systems often lack comprehensive information to aid managerial decision-making, as relevant data can be challenging to obtain across different production and distribution methods Consequently, resource allocation can be improved by modifying the current administrative systems.
Environmental management accounting allows businesses to enhance their environmental benefits and achieve greater responsibility (Schategger & Burritt, 2000; Jasch, 2006) By expanding product stewardship to include pollution avoidance throughout the entire value chain, companies can integrate this approach into product development with strong leadership commitment, thereby gaining a competitive edge A sustainable development strategy aims not only to minimize environmental harm but also to ensure ongoing environmental performance Improved environmental practices can enhance a company's reputation, indirectly aiding resource management By consolidating resources and expertise across departments, companies can increase their added value According to Sharma and Vredenburg (1998), specific competencies can lead to cost savings, operational improvements, higher product quality, product differentiation, and enhanced employee morale and reputation The NRBV and its related strategies offer valuable insights into addressing environmental uncertainties faced by companies.
Senior management plays a crucial role in environmental management within firms, as highlighted by NRBV (Zhou et al., 2018) Transformational leadership, in particular, fosters an innovative environment by inspiring and motivating team members to embrace the leader's vision for change Additionally, Boehm et al (2015) explore the connection between innovation and overall company performance, emphasizing its importance in driving success.
To minimize pollution and reduce environmental impacts, the company is committed to adhering to environmental standards through a systematic approach focused on resource minimization By differentiating its resource usage from that of competitors, the NRB V initiative not only enhances environmental sustainability but also positively influences the company's financial performance.
Hart and Dowell (2011) evaluate the Natural Resource-Based View (NRBV) theory through empirical data, confirming that most of Hart's (1995) assertions are supported Nevertheless, there remains a lack of research on the impact of combined resource firm advantages on environmental performance.
Hart and Dowell (2011) validate most of Hart's (1995) claims regarding NRBV theory through empirical data; however, the influence of resource firm advantages on environmental performance remains unexplored This study utilizes NRBV as a theoretical framework to examine how strategy affects firm operations and environmental performance, while also considering the role of Environmental Management Accounting (EMA) as highlighted by Aragon-Correa et al (2008), Christ & Burritt (2013), and Journeault (2016).
Environmental strategies encompass a range of actions aimed at reducing the ecological impact of an organization's operations through sustainable practices, resource management, and corporate policies Key initiatives include minimizing waste and energy consumption, adopting eco-friendly resources, and implementing environmental management systems The effectiveness of these strategies is significantly influenced by management's commitment to proactive environmental planning, which has been shown to enhance overall environmental performance for companies.
In today's business landscape, the implementation of Environmental Information Systems (EIS) and Environmental Management Control Systems (EMCS) has become essential for effective environmental performance Companies are increasingly recognizing the importance of proactive environmental strategy formulation as part of their overarching business strategy The integration of Environmental Management Accounting (EMA) and EMCS is significantly shaped by a firm's commitment to its environmental objectives, ensuring sustainable practices are woven into their core operations.
Environmental strategies encompass a range of actions aimed at minimizing the ecological footprint of various activities through sustainable practices, products, and corporate policies Key examples include the adoption of renewable energy sources, the reduction of pollution and dependence on non-renewable energy, and the implementation of effective ecological management techniques.
The Environmental Management System (ENS) plays a crucial role in enhancing environmental performance and is equally important for assessing its impact on a company's financial performance Research, including a study by Aragón-Correa et al (2008) on small firms in Spain, highlights the significant relationship between ENS and business performance Their analysis, based on data from 108 car garages, revealed that effective ENS contributes to innovation and environmentally friendly practices, leading to improved performance for small businesses The study emphasizes that integrating environmental strategies is essential for boosting organizational performance, underscoring the importance of aligning these strategies within the company.
Environmental uncertainty arises from unpredictable factors such as climate change, natural disasters, and rapidly shifting market dynamics influenced by customer preferences, competition, and technological advancements These uncertainties necessitate proactive measures from companies to navigate potential challenges (Pondeville et al., 2013) As organizations face new ecological uncertainties, the lack of reliable information about these variables further complicates the landscape, impacting corporate performance (Lewis & Harvey, 2001; Miller, 1992).