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The Effect of Green Accounting Implementation on Improving the Environmental Performance Mining and Energy Companies in Indonesia

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The Effect of Green Accounting Implementation on Improving the Environmental Performance Mining and Energy Companies in Indonesia Binus Business Review, 10(2), July 2019, 131-137 P-ISSN: 2087-1228 DOI: 10.21512/bbr.v10i2.5767 E-ISSN: 2476-9053 The Effect of Green Accounting Implementation on Improving the Environmental Performance Mining and Energy Companies in Indonesia Wahyuni1; Inten Meutia2; Syamsurijal3 1,2Accounting Department, Faculty of Economics, Sriwijaya University 3Economic Science Department, Faculty of Economics, Sriwijaya University Jln. Srijaya Negara Bukit Besar, Palembang 30139, Indonesia [email protected]; [email protected]; [email protected] Received: 6th July 2019/ Revised: 5th August 2019/ Accepted: 12th August 2019 How to Cite: Wahyuni, Meutia, I., & Syamsurijal. (2019). The Effect of Green Accounting Implementation on Improving the Environmental Performance Mining and Energy Companies in Indonesia. Binus Business Review, 10(2), 131-137. https://doi.org/10.21512/bbr.v10i2.5767 ABSTRACT This study aimed to prove the effect of green accounting implementation on improving environmental performance in mining and energy companies in Indonesia. In this study, the implementation of green accounting was taken from the green accounting concept that contained quantitative and qualitative information reported by the company. The observation period of this study was three years from 2014 to 2016. The object of this research was the mining and energy companies registered in the Global Reporting Initiative (GRI) database in Indonesia. The data used were secondary data obtained from sustainability reporting with the GRI-G4 report type. Data analysis was using panel data regression with a random effect model approach. The results show that the implementation of green accounting in the form of recycled materials, renewable energy, and green cost allocation has a positive and significant effect on improving environmental performance. Conversely, Corporate Social Responsibility (CSR) fund allocations do not affect environmental PRESSperformance. Keywords: green accounting, environmental performance INTRODUCTION to participate in environmental preservation efforts. This is better known as sustainable development Social and environmentalIN issues are an or Planet, People, Profit (3P) (Hussain, Halim, & interesting issue until now. This issue has been Bhuiyan, 2016). widely discussed globally and become the topic of Current industry practices that are caring and concern for the business world. Over the past few environmentally friendly are realized through the decades, there have been requests from the Indonesian application of eco-efficiency in management practices Accounting Association and accounting regulatory or green accounting in accounting practices. Green authorities. It is to immediately reform the principles, accounting applied in corporate accounting practices conceptual frameworks, and conservative accounting aims to overcome conservative accounting weaknesses. standards that underlie the accounting practices of In addition, the application of green accounting is corporate entities. This is because so far, the practice is expected to respond to the needs of corporate entities considered to be environmentally friendly and causes in recognizing and measuring values, recording, a serious ecological crisis (Lako, 2017). summarizing, reporting and disclosing financial, A company in practice is required to preserve social and environmental accounting information in the environment by carrying out a development that an integrated manner (Lako, 2017). can balance the economic, social, and environmental In relation to legitimacy theory, companies need aspects (Tu & Huang, 2015). The company is expected to emphasize social norms and values (Deegan, 2002). Copyright©2019 131 In addition, the concept of legitimacy also shows the to calculate the waste produced by the company. In existence of a social contract which the company is addition to positive research, there are also some responsible for the demands of the community and contradictory studies. Qiu, Shaukat, and Tharyan environment. The concept of legitimacy is manifested (2016) and Nazari, Hrazdil, and Mahmoudian (2017) in the form of the implementation of green accounting showed that there was a negative or insignificant effect in the company. This is expected to trigger a positive between disclosure of environmental information on development of the industry through the increased performance. Furthermore, González-Rodríguez, sales followed by increased profits, the sustainability Díaz-Fernández, and Simonetti (2015) explained of the company’s business, and the selling value of that there were differences in the perception of the industry in the eyes of investors (Megwai, Njie, & Corporate Social Responsibility (CSR) and the Richards, 2016). cultural environment, which made the research results In Indonesia, the government has encouraged insignificant. industries to implement green industry practices The difference in the results of these studies is a through the application of green accounting. One form research gap that the researchers want to examine. This of government efforts is to give awards to industries study seeks to prove the effect of implementing green that carry out green industry practices. Unfortunately, accounting on improving environmental performance the application of green accounting in developing in mining and energy companies in Indonesia. In this countries including Indonesia is still not optimal. study, the implementation of green accounting entities Zulhaimi (2015) and Marota (2017) showed that is taken from the concept of green accounting itself. there were still a few companies that implemented This concept contains quantitative and qualitative green accounting in their environmental performance information that must be reported by an entity. This reports. This was caused by limitations and the lack information will be mutually integrated and needed of legal sanctions in a country (Masud, Bae, & Kim, in economic and non-economic decision making. 2017). Integrated information will provide benefits for the Furthermore, complete and accurate company in the future. environmental information will produce good The independent variable in this study is the environmental performance (Deswanto & Siregar, implementation of green accounting, which is reflected 2018). The results of Khoirina (2016) and Khoiruman in the form of the recycled materials, renewable energy, and Haryanto (2017) explained that disclosure of the allocation of green costs, and the allocation of CSR environmental costs to management had a positive funds. The results of green cost funding and CSR funds effect on environmental performance. The results have been disclosed in the company’s sustainability of similar studies were also found related to the report. The dependent variable is environmental application of green accounting to improving performance. The renewal of this research is in the environmental performance (Hendratno, 2016). form of a comprehensive measurement environmental Some of the studies show that the concept performance. Environmental performance is measured of environmental performance is an abstraction using the environmental impact dimension with the of externalities. Externalities are described as the Toxic Releases Index (TRI) indicator. It calculates the effects felt by someone caused by the actions of total of Bahan Berbahaya dan Beracun (B3 -hazardous others (Mattmann, Logar, & Brouwer, 2016). PRESSWhen and toxic materials) waste that has a direct impact on it is connected with a company, externalities are the the environment around the object of research. effects felt by the community or the environment. The The results of this study are expected to assist company’s operational activities cause it. The perceived mining and energy companies in optimizing the effect is minimized through the implementation of implementation of green accounting. Another benefit green accounting. With the cost of externalities, of implementing green accounting is that it can create companies are required to payIN for securities from a green industry. It is environmentally friendly and externalities arising from their corporate activities. does not damage the ecology. This also relates to the The costs of this externality can be felt in the future company’s sustainable development. for the community, the environment, and the company In this research, four hypotheses will be used as itself. In the future, it can also affect the company’s seen in Figure 1. Those are: environmental performance. Latan, Chiappetta Jabbour, Lopes de Sousa H1 : Recycled material (RM) has positive and Jabbour, Wamba, and Shahbaz (2018) described that significant effect an on improving environmental companies with excellent environmental performance performance (EP). tended to disclose information that was strong, verifiable, and difficult to replicate. Meanwhile, Lisi H2 : Renewable energy (RE) has positive and (2015) showed that there was a positive influence significant effect on improving environmental between environmental costs and improved performance (EP). environmental performance. Mastromonaco (2015) H3 : Green cost allocation (GC) has positive and and Zhou, Delmas, and Kohli (2017) explained that significant effect on improving environmental the measurement of environmental performance was performance (EP). carried out with the Toxic Release Inventory (TRI) 132 Binus Business Review, Vol. 10 No. 2, July 2019, 131-137 H4 : Corporate Social Responsibility (CSR) fund report used in the form
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