Observational analysis shows minimal effect of environmental costs on corporate financial performance, suggesting improvements in reporting practices.
Environmental accounting is an important component of environmental, social, and governance reporting since it encompasses the systematic tracking of expenses associated with protecting natural resources. It offers both quantitative and qualitative insights that aid organizations in making informed decisions regarding environmental management. This study explores the connection between environmental cost and key financial parameters, namely return on assets, return on equity, and return on capital employed, which are considered as dependent factors, whereas environmental cost is treated as the independent factor for this study. The sample size is selected from the top ten Indian power sector companies listed on the BSE from 2019-20 to 2023-24 in terms of market capitalization. Data are analyzed by using panel regression in SPSS version 26. The results indicate that environmental costs have an insignificant impact on firm performance. Based on these findings, it is recommended that companies develop effective strategies for managing environmental expenditures, which could help enhance their public image and support long-term sustainability.
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Dash et al. (2025) studied this question.
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