Environmental Accounting Practices by Corporate Firms in Emerging Economies: Empirical Evidence from Nigeria

Abstract

The issue of environmental accounting is an emerging issue in developing economies like Nigeria. Though, the Federal government has enacted various environmental laws and established agencies and regulatory bodies; the problem has been that of enforcement and compliance with the various regulations. On the part of the corporate firms which claim to have policies and operating standards on environmental issue, the severity of the impact of their operations have not been abated; and hostilities and tensions with host communities have increased. This paper assessed the impact of government legislations on environmental accounting practice and compared current practices across firms in different sectors of the economy. A survey of 25 quoted firms from different sectors of the economy revealed that much attention has not be given to the cost of natural resources damages in project evaluation. The hypotheses were tested using Chi-square and Kendall Coefficient of Concordance at 5% level of significance. The results of the hypotheses testing showed that environmental accounting practice is significant in benchmarking standard for corporate reporting and that compliance with Nigerian environmental protection laws has not had significant influence on environmental accounting practice because the issues of enlightenment, enforcement and compliance have been overlooked. It was revealed that in developing an appropriate Environmental Management System (EMS), the contribution of plant environmental staff is important; they should work in cooperation with accountants. This paper recommended that accounting professionals need to be trained in environmental accounting methods and the Financial Reporting Council (FRC) should develop an accounting standard that will incorporate full consideration of financial and physical impacts of business activity on the environment.