The Effect of Green Strategy, Green Social Capital, and Environmental Consciousness on Carbon Management Accounting
Climate change and global warming are environmental problems that are hotly discussed and worried about by the world community. One of the factors causing global warming is carbon emissions which have accumulated in large quantities in the atmosphere (Kılıç and Kuzey, 2019). In the last two decades, global greenhouse gas emissions have increased by 43% since 1990, and as much as 80% has been contributed by carbon dioxide gas as the most significant contributor to climate change (Montzka, 2022). Environmental problems related to carbon emissions also occur in Indonesia. According to data from the Climate Transparency Report (2021), greenhouse gas emissions in Indonesia have increased by 157% from 1990 to 2018, or the equivalent of 947 MtCO2e. Indonesia also experienced increasing carbon dioxide emissions from 2000 to 2000. 2019, the peak of which occurred in 2012 with emissions of 1.96 metric tons per capita (World Bank, 2020).
The high amount of carbon emissions are of concern to various countries in the world, including Indonesia. One of them is through the Conference of the Parties (COP) 26 to discuss solutions to climate change, especially greenhouse gas emissions (UK COP 26, 2021). Indonesia, as one of the participating countries in COP 26, is also committed to reducing greenhouse gas emissions by 29% according to the Nationally Determined Contribution (NDC) target and can increase up to 41% in 2030 with adequate international support (Ministry of Environment and Forestry, 2021). Some of Indonesia’s efforts and participation in reducing greenhouse gas emissions can also be seen through regulations and policies issued by regulators. One form of this effort is realized through ratifying the Paris Agreement as Law of the Republic of Indonesia No. 16 of 2016 and issuing Financial Services Authority Regulation No. 51/POJK.03/2017, along with the Financial Services Authority Circular Letter No. 16/SEOJK.04/2021, in the framework of adaptation to the negative impacts of climate change, especially carbon emissions, and supporting sustainable economic growth by harmonizing economic, social, and environmental interests.
Based on the phenomena and efforts to reduce carbon emissions carried out by various countries in the world, including Indonesia, it can be concluded that the practice of Carbon Management Accounting is critical to do because companies must pay attention to activities consisting of collecting, calculating, and reporting related to greenhouse gas emissions produced as a form of social and environmental corporate responsibility (Tuesta et al., 2020; Kazemian et al., 2022). In this study, researchers looked at several internal factors that could influence carbon management accounting practices because there were still research gaps found, namely first, research conducted by Andrian and Kevin (2021), Oktris (2018), and Moini et al. (2014) that green strategies have a significant positive effect on carbon management accounting. This is because the company is proactive in responding to climate change and recognizes and integrates risks and opportunities in corporate strategies that impact the environment due to climate change. In contrast, research conducted by Li et al. (2016) and Zhu et al. (2007) does not show a significant effect because green strategy refer more to measures of competitiveness in economic and financial results, as well as financial performance.
This research was conducted using individual respondents at the organizational level using a minimum level of supervisors, managers, to directors at listed and non-listed companies on the Indonesia Stock Exchange (IDX), proving that green strategy and green social capital have a significant positive effect on carbon management accounting. Meanwhile, environmental consciousness does not significantly affect carbon management accounting. This proves companies that focus on and are involved in formulating green strategy and making changes to green strategy business models supported by social capital companies that help each other in discussions to share knowledge, generate new ideas, and improve company performance, primarily related to the environment, can encourage implementation of carbon management accounting.
The practical implications of this research will support the government’s commitment to reducing greenhouse gas emissions by 29 percent by 2030 by leveraging competitive advantages through environmentally friendly strategies; having environmentally friendly social capital will demonstrate a company’s ability to manage carbon emissions through carbon management accounting. Then this study also has limitations, namely the subjectivity of respondents when answering the questions on the questionnaire and the adjusted R Square value of only 55.6%. At the same time, the other 44.4% is explained by other variables not included in this study. For future research, increase the number of respondents by expanding the sample not only in Indonesia but also in countries such as ASEAN so that research results can be more generalizable and comparative and can use mixed method research to better understand research problems by triangulating quantitative and qualitative data.
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