Effect of Green Accounting Practices and Corporate Social Responsibility Disclosure on Profitability Using the International Council on Mining and Metals (ICMM) Standard

Abstract

This study investigates the influence of green accounting practices and corporate social responsibility (CSR) disclosure on the profitability of mining companies in Kenya. Profitability remains a central measure of corporate financial performance, reflecting the efficiency and success of a firm in generating returns from its operations. The research examines the relationship between green accounting and CSR disclosure as independent variables and firm profitability as the dependent variable, while controlling for company size. Green accounting is quantified using a dummy variable representing the presence or absence of environmental cost reporting, while CSR disclosure is assessed based on the International Council on Mining and Metals (ICMM) standards. The study adopts a quantitative research approach, utilizing multiple linear regression analysis and purposive sampling. Data were collected from annual reports, sustainability reports, and financial statements of mining companies listed on the Nairobi Securities Exchange (NSE) from 2017 to 2022. Preliminary findings indicate that the adoption of green accounting practices positively affects firm profitability, suggesting that firms integrating environmental costs into their financial reporting enhance stakeholder trust and operational efficiency. Conversely, CSR disclosure alone does not exhibit a significant effect on profitability, and the simultaneous implementation of green accounting and CSR disclosure does not significantly influence firm profitability. These findings underscore the importance of environmental cost accounting as a tool for improving financial performance in Kenya’s mining sector.