Green Accounting and Sustainable Financial Reporting Practices in Companies: An Empirical Investigation

Abstract

This study empirically examines the adoption, determinants, and organizational consequences of green accounting and sustainable financial reporting practices (SFRPs) among publicly listed companies in India. Drawing on primary survey data from 406 senior financial and sustainability officers across 14 industries, supplemented by archival data from 224 listed companies over the period 2017–2023, this research employs structural equation modelling (SEM), panel data regression with two-way fixed effects, binary logistic regression, and bootstrapped mediation analysis to test a theoretically grounded set of hypotheses. Green accounting practices are operationalised across four dimensions: environmental cost accounting, carbon footprint accounting, natural capital valuation, and integrated reporting (IR) adoption. Sustainable financial reporting encompasses GRI (Global Reporting Initiative) standard compliance, BRSR (Business Responsibility and Sustainability Reporting) adherence, ESG disclosure quality, and non-financial performance integration. Results demonstrate that green accounting and SFRD adoption significantly improve firm financial performance (ROA: β = 0.36, p < 0.001; Tobin's Q: β = 0.41, p < 0.001) and non-financial performance (stakeholder trust: β = 0.47, p < 0.001; environmental legitimacy: β = 0.52, p < 0.001). Environmental cost accounting emerges as the single strongest predictor of cost efficiency gains (β = 0.44, p < 0.001), while integrated reporting adoption has the largest positive effect on investor perception (β = 0.49, p < 0.001). Corporate governance quality, industry environmental intensity, and ownership structure significantly moderate these associations. Mediation analysis confirms that corporate reputation partially mediates the SFRP–financial performance pathway (indirect effect = 0.182, 95% CI [0.121, 0.249]). The findings advance institutional and stakeholder theory by providing large-sample empirical evidence that voluntary sustainability disclosures create measurable economic value beyond regulatory compliance.