Risk regulation,community pressure and the use of management accounting in managing climate change risk: Australian evidence |
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| Affiliation: | 1. Department of Accounting, Economics and Finance, Faculty of Business and Law, Swinburne University of Technology, Melbourne, Australia;2. Department of Banking and Finance, Monash Business School, Monash University, Melbourne, Australia;1. Bangor Business School, University of Bangor, Bangor, Gwynedd, LL57 2DG, UK;2. Hull University Business School, University of Hull, Hull, HU6 7RX, UK;1. The University of York, The York Management School, Freboys Lane, York, YO10 5GD, UK;2. Faculty of Commerce, Port Said University, Egypt;3. The Open University, The Open University Business School, Walton Hall, Milton Keynes, MK7 6AA, UK;1. Europa-Universität Viadrina Frankfurt (Oder), Faculty of Business Administration and Economics, Frankfurt (Oder), Germany;2. Universität Hamburg, School of Business, Economics and Social Sciences, Hamburg, Germany;3. Technische Universität Dresden, Faculty of Business and Economics, Dresden, Germany |
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| Abstract: | This exploratory study is amongst the first to investigate how companies perceive the regulation of carbon emissions and the pressure exerted by the community in an environment characterised by risk and uncertainty. Semi-structured interviews were conducted among 39 executives who were directly involved in carbon emissions management in 18 large listed Australian companies. Consistent with Prospect Theory, we find that decision-makers are threat biased and are more likely to take immediate actions when climate change issues are framed as threats as opposed to opportunities. From the interview data, it is seen that managers use management accounting techniques as a risk management tool in mitigating risks associated climate change issues. Furthermore, this use of management accounting appears to be driven primarily by the protection of economic interests, regulatory pressure and reputational pressure. The study provides insights into how perceptions of climate change uncertainties and external pressure for disclosure of emissions information influence companies to use management accounting in managing climate change risk. |
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| Keywords: | Climate change Carbon emissions Management accounting Risk management |
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