Environmental costs and its role in improving the quality of financial reporting


Environmental Accounting
Environmental Costs
Financial Reporting
Financial Performance

How to Cite

Bicer, A. A., & El.Darewi, E. (2019). Environmental costs and its role in improving the quality of financial reporting. International Journal of Research in Business and Social Science (2147- 4478), 8(5), 194-211. https://doi.org/10.20525/ijrbs.v8i5.344


This study aims to show the importance of environmental costs, and the role of these costs to improve the quality of financial reporting in Libyan oil companies and offering the suggestions to develop it. To achieve the objectives of the study, the researchers developed a questionnaire contains (35) questions, distributed to (100) of the officials of the financial departments, auditing, and costs and the parties concerned with the preparation of financial reports, collected and used in the analysis, a one-sample T-test was used. It seems to the researchers that there was the presence of environmental awareness and the company's strategy towards environmental issues, the study also showed there are obstacles that limit the application of measurement and disclosure of environmental costs. Moreover, it seems to the researchers that the measurement models for environmental costs increase the company's commitment to environmental responsibilities. The results of the study also showed the presence of a statistically significant relationship between environmental costs and the increase in the quality of the financial reports. Finally, there was a statistically significant relationship between environmental costs and decision making. The study suggested some recommendations to develop the application of accounting for environmental costs and disclosure to provide appropriate information to rationalize and take decisions in the oil companies in Libya, as well as the need for companies to protect the environment and provide funding and support to preserve the environment.



Abdel Sayed, N., Sultan, A. & Yousef, Z. (2009). Environmental Accounting: suggested framework to disclosure for environmental information in the uniform Accounting system. Applied study in south Refiner Co."Basrah refinery", University of Basra / Faculty of Management and Economics, pp1-28

Ali, A. H. (2016). Environmental costs and its role in improving the accounting information provided to decision-making field study in industrial companies- Al-Anbar. Journal of Danair. 8(1), pp51- 80.

AlShehadeh, A. (2010). The accounting measurement of the environmental performance costs of the Syrian General Fertilizer Company and its impact on its competitiveness in the field of quality. Journal of Damascus University for Economic and Legal Sciences.26(1), pp 273-304.

Al Sufi, F. H., Al Qatish, H. M., &Garageesh, J. (2012). The importance of cost and environmental disclosure in the rationalization of administrative decisions in the industrial joint stock companies listed on the Amman Stock Exchange. The faculty of managerial and financial sciences. The University of Isra. pp1-31.

ASSOCIATION FRANÇAISE DE NORMALISATION. (2009). Environment la famille des normes ISO 14000. Availablefromhttps://www.iso.org/files/live/sites/isoorg/files/archive/pdf/fr/theiso14000family_2009.pdf

CDSB Framework, for reporting environmental information, natural capital and associated business impacts. (2018). " Advancing and aligning disclosure of environmental information in mainstream reports”. Available from: https://www.cdsb.net/sites/default/files/cdsb_framework_2 (1).pdf.

Coker, A.O. (2011). Environmental Pollution: Types, causes, impacts, and management for the health and socio-economic well-being of Nigeria. The University of Ibadan. Ibadan, pp 1-23.

Cormier, D., & Magnan, M. (2007). The revisited contribution of environmental reporting to investors' valuation of a firm's earnings: An international perspective. Ecological Economics. 62, pp 613-626.

Dejean, F., & Martinez, I. (2009). Environmental Disclosure and the Cost of Equity: The French Case. Accounting in Europe. 6(1), pp 57-80.

Habicht II, F. H. (1992). Memorandum on EPA definition of "pollution prevention". [Washington, D.C.], U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics Pollution Prevention.

Hajj, W.O. (2017). The impact of environmental costs on evaluating the performance of industrial establishments. Journal of Graduate Studies - Nile University.7(28), pp 129-148.

Hanan, S.S. (2014). ' Accounting Measurement of Environmental Impacts and Their Disclosure in Industrial Establishments Constantine -SCHB - Case Study of Hameh Bouziane Cement Corporation', Ph.D. thesis, University of Constantine.

Haverkamp, D.-J. (2007). Environmental Management in The Dutch Food and Beverage Industry a Longitudinal Study into The Joint Impact of Business Network and Firm Characteristics On the Adoption of Environmental Management Capabilities. Wageningen, Wageningen Academic Publishers.


IFAC. (2005). issues new guidance on environmental management accounting. INTERNAL AUDITING AND BUSINESS RISK. 29, 44.

International Integrated Reporting Council (IIRC) (2013), “Integrated reporting: Elevating value. The IIRC”. Available at: www.theiirc.org.

Jing, H, & Songing, L. (2011). The Research of Environmental Costs Based On Activity Based Cost. 2011 3rd International Conference on Environmental Science and Information Application Technology, ESIAT 2011. Procedia Environmental Sciences. 10, pp 147 -151.

Judeh, M. (2014). Total Quality Management: Concepts and Applications. Dar Wael for Publishing.

Karna, J., Hansen, E., & Juslin, H. (2003). Social responsibility in environmental marketing planning. European Journal of Marketing. 37(5/6), pp 848-871.

Magara, R., Aming ’A, N., & Momanyi, E. (2015). Effect of Environmental Accounting on Company Financial Performance in Kisii County. British Journal of Economics, Management & Trade. 10, pp 1-11.

Mansouri, K., & Ramzy, J. (2008). 'Environmental auditing as one of the requirements of sustainable enterprise and sustainable development ', paper presented to International Scientific Conference: Sustainable Development and Utilization of Available Resources, Farhat Abbas University, Setif, 7-8 April.

Kawano, M, Ogasawara, M, Kurasaka, T, Gunjima, T, Kokubu, K, Tada, H, Miyata, R, Morishita, K, Morishima, A, & Yabe, H. (2000). Developing an Environmental Accounting System. A Study Group for developing a system for environmental accounting, developing an environmental accounting system, environmental agency Japan.

Moore, D. R. (2008). Transformation of the Australian public sector and environmental accounting practices: the case of water in 2001. Australasian Accounting Business and Finance Journal, 2(1), pp 60-81.

Nasser, A. T., & Al kafaf, H. H. (2012). The importance of accounting measurement of environmental costs and their role in activating the quality of accounting information for decision-making A survey study of the views of a sample of industrial establishments in Mosul. Journal of Economics & Administration, 35(92), pp 65-103.

Peter, L., & Roger K, T. (2000). Environmental cost accounting and auditing. Managerial Auditing Journal. 15, pp 424-431.

Qiao, F. Qing Li, Q., & Yu, L. (2017). Essential Tasks to Reduce Environmental Pollution in Urban Transportation Networks. Environ Pollut Climate Change, an open access journal. 1(4) , pp 1-5.

Rabie, M, I. (2017). The Future of Sardi Disclosures from the Perspective of Strategic Management Accounting with an Exploratory Study. The First Scientific Conference of the Accounting and Auditing Department "The role of accounting and auditing in supporting economic and social development in Egypt" during the period from 6-7 May, pp 200- 266. Available at: https://www.researchgate.net/publication/324280191.

Russell, W. G., Skalak, S. L., & Miller, G. (1994). Environmental cost accounting: The bottom line for environmental quality management. Environmental Quality Management. 3, pp 255-268.

Saheen, B. (2000). External Review, Specialized Topics. Cairo: University House.

Saleh, R. (2009). The role of accounting disclosure on environmental performance in rationalizing decisions and improving the quality of financial reports. Journal of Business Research,31(2/1), pp 51-100.

Savage, A., Gilbert, E., Rowlands, J., & Cataldo, A. (2001). Environmental disclosure in annual reports: a legitimacy theory perspective. SA Journal of Accounting Research. 15(2), pp 19-48.

Suttipun, M., & Stanton, P. (2012). A Study of Environmental Disclosures by Thai listed Companies on Websites. Procedia Economics and Finance. 2, pp. 9-15. Available at: Available at: http://www.sciencedirect.com.

Tanc, A., & Gokoglan, K. (2015). The Impact of Environmental Accounting on Strategic Management Accounting: A Research on Manufacturing Companies. International Journal of Economics and Financial, 5(2), pp 566-573.

The Industry of Chartered Accountants of India. ICAI. (2002). http://www.icai.org/.

Tijani, B., & Abdul Halim, F. (2008)." The Green Accounting System in the Framework of Sustainable Development". The First International Conference on Sustainable Development and Efficiency of Available Resources, Faculty of Economic, Commercial and Management Sciences, Farahat Abbas Setif University, 8, pp1-22.

UN. Department of Economic and Social Affairs. Division for Sustainable Development.; United States. Environmental Protection Agency.; United Nations Environment Programme. (2000). Improving governments' role in the promotion of environmental managerial accounting: an initiative of the United Nations Division for Sustainable Development. New York, UN.

Whitelaw, K. (2004).' Concepts and the ‘spirit’ of ISO 14001-Chapter 1', in ISO 14001 Environmental Systems Handbook. Hoboken, Taylor and Francis, 2nd edn, pp 1-21.

Yakhou, M., & Dorwiler, V. P. (2002). Environmental Accounting Coverage in the Accounting Curriculum: A Survey of U.S. Universities and Colleges. Journal of Education for Business. 78, pp 23-27.

Authors contributing to IJRBS agree to publish their articles under the Creative Commons Attribution- 4.0 NC license, allowing third parties to share their work (copy, distribute, transmit) and to adapt it, under the condition that the authors are given credit, that the work is not used for commercial purposes, and that in the event of reuse or distribution, the terms of this license are made clear. Authors retain copyright of their work, with first publication rights granted to IJRBS. However, authors are required to transfer copyrights associated with commercial use to the Publisher. The authors agree to the terms of this Copyright Notice, which will apply to this submission if and when it is published by this journal

Submission of an article implies that the work described has not been published previously( exceptin the form of an abstract or as part of a published lecture or academic thesis), that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, it will not be published elsewhere in the same form, in English or in any other languages, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication