Accounting for Green Cost Implication on the Financial Performance of Listed Manufacturing Firms in Nigeria
DOI:
https://doi.org/10.26565/2310-9513-2026-23-04Keywords:
Clean technology adoption costs, financial performance, pollution control costs, recycling costsAbstract
The costs incurred to acquire green technology or install pollution-abatement facilities usually translate into direct, indirect, or operating expenses. This study examined the effect of green cost accounting practices specifically clean technology adoption, pollution control, and recycling costs on the financial performance of Nigerian listed manufacturing firms. An ex-post facto research design was employed to analyse data from a random sample of 47 firms listed on the Nigerian Exchange Group (NGX) as of December 31st, 2024. Descriptive and inferential statistics, including linear regression, were applied. Findings revealed that the coefficient of clean technology adoption cost was 0.2108, indicating a positive relationship with return on assets (ROA). Thus, a unit increase in clean technology adoption cost raised ROA by 0.2108 units. However, this effect was statistically insignificant (P=0.4393>0.05). The coefficient of pollution control cost was -0.0746, suggesting a weak negative relationship with ROA. A unit increase in pollution control cost reduced ROA by 0.0746 units, though this effect was also insignificant (P=0.8165>0.05). Similarly, the coefficient for recycling cost was 0.3630, reflecting a positive association with ROA, where a unit increase raised ROA by 0.3630 units. Yet, this relationship too was insignificant (P=0.8165>0.05).The study concludes that investments in green initiatives may not yield immediate financial returns for Nigerian manufacturing firms. Policymakers are therefore encouraged to design supportive policies and provide financial incentives to enhance the financial viability of adopting green practices.
References
Abou Taleb, M., & Al Farooque, O. (2021). Towards a circular economy for sustainable development: An application of full cost accounting to municipal waste recyclables. Journal of Cleaner Production, 280, 124047. https://doi.org/10.1016/j.jclepro.2020.124047
Ayeleru, O. O., Fajimi, L. I., Oboirien, B. O., & Olubambi, P. A. (2021). Forecasting municipal solid waste quantity using artificial neural network and supported vector machine techniques: A case study of Johannesburg, South Africa. Journal of Cleaner Production, 289, 125671. https://doi.org/10.1016/j.jclepro.2020.125671
Bollinger, B. (2015). Green technology adoption: An empirical study of the Southern California garment cleaning industry. Quantitative Marketing and Economics, 13, 319-358. https://link.springer.com/article/10.1007/s11129-015-9163-0 https://doi.org/10.1007/s11129-015-9163-0
Damieibi, I. J. (2023). Environmental accounting practices and net profit of quoted oil and gas companies in Nigeria. Nigerian Journal of Management Sciences, 24 (19), 130, 141.
Enekwe, C. I., Ugwudioha, O. M., & Uyagu, B. D. (2023). Effect of environmental costs on the financial performance of listed oil and gas companies in Nigeria. International Journal of Accounting Research, 8(1), 31-36. https://doi.org/10.65453/ijar.v8i1.688
Gu, H., Yang, S., Xu, Z., & Cheng, C. (2023). Supply chain finance, green innovation, and productivity: Evidence from China. Pacific-Basin Finance Journal, 78, 101981. https://doi.org/10.1016/j.pacfin.2023.101981
Hoque, M. M., Islam, A., Islam, A. R. M. T., Pal, S. C., Mahammad, S., & Alam, E. (2023). Assessment of soil heavy metal pollution and associated ecological risk of agriculture dominated mid-channel bars in a subtropical river basin. Scientific Reports, 13(1), 11104. https://www.nature.com/articles/s41598-023-38058-0 https://doi.org/10.1038/s41598-023-38058-0
Hosam, A. R., Maher, A. A., Henry, H. H., Barbara, G., Salsabila, A. A. (2020). The Analysis of Green Accounting Cost Impact on Corporations Financial Performance. International Journal of Energy Economics and Policy 10(6), ISSN: 2146-4553 421-426. https://doi.org/10.32479/ijeep.9238
Kifordu, A. A. (2022). Recycling sustainability on organizational performance of publishing firms: a survey-based approach. Journal of Global Social Sciences, 3(10), 103-118. https://doi.org/10.58934/jgss.v3i10.35
Laine, M., Tregidga, H., & Unerman, J. (2021). Sustainability accounting and accountability. Routledge. https://doi.org/10.4324/9781003185611
Lanteri, A., & Rampini, A. A. (2023). Financing the adoption of clean technology. Mimeo.
Odum, A. N., & Arinomor, C. O. (2023). Green accounting cost and financial performance of Oil and Gas companies in Nigeria. Journal of Global Accounting, 9(4), 1-22.
Okorie, D. I. (2021). The energy use of capital inputs: towards cleaner production in Nigeria. Environmental Challenges, 4, 100104. https://doi.org/10.1016/j.envc.2021.100104
Okporo, E. N., Okafor, L. C., Chukwu, U. C., & Uguru, L. C. (2023). Green accounting and financial performance in Nigerian industries: A study of selected oil and gas firms in Nigeria. Certified National Accountant Journal, 31(4), 81-98. https://doi.org/10.70518/cnaj.v31i4.06
Olawumi, T. O., Chan, D. W., Saka, A. B., Ekundayo, D., & Odeh, A. O. (2023). Are there any gains in green-tech adoption? Unearthing the beneficial outcomes of smart-sustainable practices in Nigeria and Hong Kong built environment. Journal of Cleaner Production, 410, 137280. https://doi.org/10.1016/j.jclepro.2023.137280
Pratiwi, A., Nurulrahmatia, N., & Muniarty, P. (2020). Pengaruh Corporate Social Responsibility (CSR) Terhadap Profitabilitas Pada Perusahaan Perbankan Yang Terdaftar di BEI. Owner: Riset dan Jurnal Akuntansi, 4(1), 95-103. https://doi.org/10.33395/owner.v4i1.201
Riyadh, H. A., Al-Shmam, M. A., Huang, H. H., Gunawan, B., & Alfaiza, S. A. (2020). The analysis of green accounting cost impact on corporation’s financial performance. International Journal of Energy Economics and Policy, 10(6), 421-426.
Shi, J., Yu, C., Li, Y., & Wang, T. (2022). Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations. Technological Forecasting and Social Change, 179, 121678. https://doi.org/10.1016/j.techfore.2022.121678
Rahman, M. M., & Islam, M. E. (2023). The impact of green accounting on environmental performance: mediating effects of energy efficiency. Environmental Science and Pollution Research, 30(26), 69431-69452. https://doi.org/10.21203/rs.3.rs-2604713/v1
Robaina, M., & Madaleno, M. (2020). The relationship between emissions reduction and financial performance: Are Portuguese companies in a sustainable development path. Corporate Social Responsibility and Environmental Management, 27(3), 1213-1226. https://doi.org/10.1002/csr.1876
Thao, V. T. T., Tien, N. H., & Anh, D. B. H. (2019). Sustainability Issues in Social Model of Coporate Social Responsibility Theoretical Analysis and Practical Implication. Journal of Advanced Research in Management, 10(1 (19)), 17-29. https://doi.org/10.14505//jarm.v10.1(19).02
Trotta, L., Bernardini, V., Ermini, M. V., Campana, L. G., Verna, M., Raimondi, G., & Spazzafumo, G. (2024). Climate finance-driven feasibility study of a green ammonia and urea production plant in Italy. International Journal of Hydrogen Energy.137/suppl/C 987-999; https://doi.org/10.1016/j.ijhydene.2024.08.079
Downloads
Published
Issue
Section
License
Authors submitting publications for this edition agree to the following terms:
- The authors retain the copyright to their publications and grant the journal “The Journal of V. N. Karazin Kharkiv National University. Series: International Relations. Economics. Country Studies. Tourism” for the right of first publication.
- Submission and acceptance of a publication to the journal means that the authors grant the journal a non-exclusive license to publish, distribute, and archive the material in print and electronic form and to include it in international abstracting and bibliographic databases.
- Authors may:
- deposit the published version of their work in institutional or disciplinary repositories,
- distribute it on personal or professional web pages,
- use the material for educational or research purposes,
provided that:
- the publication is not altered,
- it is not used for commercial purposes,
- a complete bibliographic reference for the publication in the journal is provided.
Authors' Responsibility
- The authors guarantee that the submitted publication is an original work and does not infringe on the copyrights or intellectual property of third parties.
- The authors confirm that this manuscript has not been published previously and is not under consideration by another publisher.
- If the publication uses materials (figures, tables, data, etc.) belonging to third parties, the authors are responsible for obtaining the necessary permissions and for correctly citing the sources.
Publisher's Responsibility
- This publication ensures a transparent and ethical publication process, as well as open access to all materials in accordance with the terms of the CC BY 4.0 license.
- The publication guarantees long-term digital preservation of content by archiving it in internal and external repositories.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication of this work under the terms of a license Creative Commons Attribution License 4.0 International (CC BY 4.0).
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
