Green Accounting and Financial Performance of Non-Financial Firms in Nigeria

This study examines the impact of green accounting disclosures on the financial performance of listed non-financial firms in Nigeria. With global attention shifting toward environmental sustainability, green accounting has become an increasingly important framework for integrating environmental considerations into financial reporting. However, in developing economies such as Nigeria, the extent to which green disclosures influence financial performance remains underexplored. This study bridges this gap by employing an ex post facto research design and analyzing a panel dataset covering 60 non-financial firms listed on the Nigerian Exchange Group between 2015 and 2024. A Green Accounting Disclosure Index (GADI) was constructed based on the Global Reporting Initiative (GRI) Standards, capturing environmental policy statements, energy use and conservation, waste management, emission controls, water conservation, and environmental liabilities. The index was regressed against key performance indicators—Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM), while controlling for firm size, leverage, firm age, and industry sector. The empirical results demonstrate a consistently positive and statistically significant relationship between green accounting disclosures and all three financial performance indicators. Firms with stronger environmental reporting practices exhibited superior profitability and efficiency, providing evidence that sustainability initiatives yield both ecological and financial benefits. Interestingly, the effect of control variables such as firm size and age was marginal, indicating that even medium-sized firms can benefit from sustainability-oriented practices. These findings affirm the business case for green accounting, challenging the perception that environmental disclosures are mere compliance costs. The study concludes that green accounting enhances not only transparency and legitimacy but also long-term corporate profitability. It recommends that Nigerian regulators institutionalize mandatory environmental disclosure frameworks, integrate sustainability reporting into mainstream financial statements, and support firms with capacity-building initiatives. By doing so, firms can align with global sustainability trends while maximizing shareholder value.