A STUDY ON THE INTEGRATION OF FINANCIAL AND CARBON PERFORMANCE: A CASE STUDY IN SRI LANKA INSURANCE CORPORATION

Abstract

In today's world, excessive greenhouse gas emissions due to anthropogenic activities have resulted in global warming and climate change, which is a serious global issue. Carbon footprint is a valuable tool for emissions cuts and verification (Awanthi & Navaratne, 2018). Further, there is an increasing demand for financial and carbon performance integration since they are often managed separately in business practices and also examined separately in research (Qian, 2012). Accordingly, this study mainly focuses on assessing carbon efficiency (integration of financial and carbon performance). Sri Lanka Insurance Corporation (SLIC head office and the entire SLIC network of 140 branches) was selected, and in order to provide a reliable conclusion, 2019 year was selected as the base year for the study since 2019 is the year in which all operations of SLIC were carried out as usual before the Covid pandemic affected. The carbon footprint analysis was conducted according to the ISO 14064-1, 2018 latest standard. The total carbon footprint of SLIC is 3473.88 tCO2e/2019 year. The SLIC head office and the branch network’s total carbon footprints are 1537.40 tCO2e/2019 year and 1936.48 tCO2e/2019 year, respectively. The major GHG emission source of the total carbon footprint is the emissions from electricity consumption (2466.49 tCO2e/kWh), and it represents 71% of the total CF. Further, the carbon efficiency in the 2019 year is LKR 14.01 million/tCO2e, while life insurance represents 59% and general insurance represents 41% of the overall carbon efficiency. Moreover, the researcher applied the Paired t-test to statistically prove the change in the carbon efficiency after the Covid pandemic affected Sri Lanka. As per the results, there is no significant change, but there is a slight improvement in carbon efficiency. Further, there is a positive relationship between the total revenue and the carbon efficiency of SLIC, and the carbon efficiency will be –1.235 when there is no revenue generation. Also, it will be increased by 0.003774 when the revenue is increased by one LKR million, and 80.2% of the variation in the carbon efficiency can be explained through the total revenue. It is recommended to focus on the reduction of electricity consumption in order to significantly reduce GHG emissions and thereby enhance carbon efficiency. The application of different eco-efficiency measures such as eco-efficiency of energy use, water use including the carbon efficiency as a comparative analysis among other insurance sector companies can be suggested as future research directions