The Impact Of Environmental Accounting Disclosing Practices On Financial Performance Of Listed Manufacturing Companies In Sri Lanka

Abstract

Environmental Accounting is an important tool for understanding the role played by the natural environment in the economy. Environmental Accounts Provide data which highlight both the contribution of natural resources to economic well-being and the costs imposed by pollution or resource degradation. Enterprises, which are important subjects of economical activities, play major roles in economical activities. Therefore, clear incorporation of the objective called environmental conservation in each business activity becomes a powerful motive force for the structural transformation of this economic society. This study has focused on assessing the impact of Environmental Accounting Disclosing Practices on financial performances of the listed manufacturing companies in Sri Lanka. Environmental Accounting Disclosing practices and Financial Performance are being the main variable. GRI Guidelines aspects were used as independent variable and also financial performance as dependent variable. Waste management, Energy consumption, Water usage, Emission management and environmental compliance are used as environmental accounting disclosure aspects. The target population was 22 manufacturing companies listed in Colombo stock exchange. This is an exploratory study based on analyzing secondary data to answer the research problem of how does the application of EA relate with financial performance in listed manufacturing companies in Sri Lanka. Data was collected using annual reports and sustainable report of these companies. The result of this study provide directions toward building a strong knowledge base for future EA development. Based on these findings, the researcher recommends among others, that firms should adopt uniform reporting and disclosure standards of environmental practices. This will enhance control and measurement of performance. The study also advocates that firms, should be encouraged to disclose their environmental practices in their annual reports in order to enhance their competitiveness which would subsequently, lead to higher corporate performance. And also the result suggest that government should establish legal and regulatory framework for environmental issues