Carbon Management Accounting Adoption: Determinants and Its Impact on Corporate Performance

Pradnya Dewi

Despite the potential role of Carbon Management Accounting (CMA) in achieving industrial development and climate change mitigation goals in developing countries, carbon management activities tend not to be the primary strategy as companies devote more to achieving economic and financial benefits. Therefore, insight into designing a proper CMA that addresses environmental issues while ensuring economic benefits is crucial to encouraging and inducing CMA adoption. Drawing on the contingency theory, this study surveyed 163 manufacturing companies in Indonesia to investigate CMA adoption in a developing country by examining determinants of CMA adoption and analysing CMA relationship with corporate environmental and financial performance. The data were analysed using PLS-SEM, which enables an integrative assessment of these relationships. CMA adoption was found to be positively related to financial performance. Interestingly, the study found no relationship between CMA adoption and environmental performance. However, this relationship could be contingent upon the effectiveness of CMA process coordination, highlighting the significant role of coordination in the CMA process in achieving environmental goals. The internal contingency factors, such as environmental strategy and information technology, are directly associated with CMA adoption, and further analysis underscores that these factors also indirectly impact financial performance through CMA adoption. This finding highlights the significant role of a well-designed environmental strategy and an integrated information technology within the CMA process. The study also reveals that the perception of environmental uncertainty indirectly influences CMA adoption, as it is contingent upon the environmental strategy. The findings provide insight for managers and practitioners in streamlining contingency aspects that contribute to an effective Carbon Management Accounting (CMA), in addressing climate change issues and provides economic benefits.

Carbon Management Accounting Adoption: Determinants and Its Impact on Corporate Performance

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