The Practice, Obstacles and Benefits of Voluntary Environment Management Accounting Practice in Green Adopted Apparel Manufacturing Enterprises in Sri Lanka:A Qualitative Research

Abstract

Environmental Management Accounting (EMA) has emerged as a new branch of accounting due to the heightened concern on environmental sustainability by business organizations during the past decade. However, the knowledge of EMA in the Sri Lankan context is scarce. Therefore, this research's primary purpose is to explore the voluntary EMA practices in green adopted apparel manufacturing enterprises in Sri Lanka. I designed this exploratory study as a qualitative multiple case-study and used an inductive reasoning approach to arrive at the findings. I purposefully selected five green implemented apparel factories in Sri Lanka to explore EMA practices. I interviewed Sustainability Managers and Executives of the selected organizations and analyzed the data by using thematic analysis. Organizations use different EMA practices for water, energy, waste, culture, and biodiversity. On the one hand, companies recognize input-output analysis, budgeting for EMA, and total cost assessment as EMA practices. On the flip side, I could identify the lack of accounting standards for EMA, unawareness of EMA, and perceived huge costs associated with EMA as barriers to promoting EMA. Managers perceive that EMA improves the brand image, enhances productivity, creates an accurate picture to the organizations, and predicts the future with proactive planning. This research contributes to the EMA knowledge by exploring EMA techniques, obstacles encountered and benefits when following EMA practices of large-scale green adopted apparel enterprises in Sri Lanka. EMA can be implemented in organizations and the problem of hiding the environmental cost within overhead costs can be addressed by recognizing environmental costs and benefits separately. Eventually, this study provides insight to link sustainability into accounting in organizations.