From waste to worth: How environmental accounting translates sustainability practices into organizational value

Abstract

Environmental accounting and reporting address public environmental issues and demonstrate a company's commitment to sustainability, which is highly susceptible to the effects of climate change, especially in Bangladesh. Despite the increasing focus on sustainability reporting, there is a lack of research on the systematic translation of specific environmental management practices into organizational value through environmental accounting and reporting. These practices include solid waste, wastewater, energy, emissions, and monitoring. Accordingly, the study's primary aim is to identify the factors that influence an organization's environmental accounting and reporting and how these factors impact its goodwill, reputation, financial performance, and environmental sustainability. After gathering the data, several discrepancies were identified in the questionnaire, and 400 participants were selected following the data-cleaning process of 450 respondents. The research employed Smart PLS (4.1.0.0) with a PLS-SEM approach. The results support most of the hypothesized relationships. Specifically, SWM has a significant influence on EAR (β = 0.128), as do WWM (β = 0.256), EC (β = 0.568), and EA (β = 0.152). However, the relationship between PIM and EAR was not statistically significant (β = 0.053, p = 0.289), indicating that internal monitoring does not always translate into external environmental disclosures. Likewise, EAR was found to significantly enhance organizational outcomes, as it positively impacts OGR (β = 0.186), OFP (β = 0.139), and OES (β = 0.586). These findings underscore the importance of environmental initiatives and transparent reporting in achieving both reputational and financial benefits, as well as sustainability benefits. This research extends the legitimacy and stakeholder theory by demonstrating how strategic environmental practices and disclosure behaviors converge to enhance corporate performance, particularly in developing country contexts.