An exploration of the implementation and usefulness of environmental management accounting- A comparative study between Australia and Sri Lanka
This paper reports the findings of an exploratory study on the usefulness and implementation of environmental management accounting (EMA) practices in Australia and Sri Lanka. To improve corporate sustainability management practices, EMA has been increasingly adopted by corporations throughout the world, but prior studies focus mostly on developed countries (e.g., Europe, Australia and the U.S.). Considering that several multinational companies operate in developing countries, particularly in Asia, research focusing only on the implementation of EMA practices in developed countries does not provide a comprehensive picture of the global status of EMA. In addition, the challenges of environmental sustainability such as global warming and water scarcity are found worldwide, thus they require actions from both developed and developing nations. By investigating the similarities and differences between actual EMA practices and their implementation in Australia (a developed country) and Sri Lanka (a developing country), this study finds insightful outcomes relating to EMA implementation and its drivers and barriers within companies in both countries. Using a survey, we solicited views from 50 corporate managers in Australia and 81 corporate managers in Sri Lanka. This was followed up by interviews with 18 managers in Australia and 31 managers in Sri Lanka. Our findings show that EMA practices are increasingly adopted in both countries, but Australian companies focus more on the aspect of external reporting to satisfy their local audiences, while Sri Lankan companies see EMA as an opportunity to transform and enhance internal processes. Also, many aspects of EMA practices are not strategically integrated into corporate decision-making processes, with little alignment between EMA and mainstream accounting or finance functions. The study found that Sri Lankan companies have better knowledge and professional expertise in EMA, mainly due to better formal training offered through institutions such as CIMA, but companies in both countries claim that more effort is needed to integrate and align EMA with traditional accounting systems.