Factors hindering the application of environmental management accounting among manufacturing companies in Kenya

Abstract

The need for businesses to be accountable to the impact they have on the environmenta has nessesitated the adoption of environmetal management accounting (EMA). EMA adoption has not only proved to respond to environemental challenges of businesses but also imrove their financial performance. However, research on manuafcturng companies in Kenya ahs shown low adoption of EMA. The aim of this study was to establish the challenges to adoption of EMA and their association with level of adoption. The study adopted a questionnaire to collect data on adoption level and challenges to adoption. The data was analyzed using descriptive statistics and narrative analysis. The relationship between EMA and challenges was analyzed by use of multiple regression analysis. The results of this study show that the adoption level of EMA among manufacturing is still low with an industry average of 40% similar to previous studies. There is varied levels of adoption among companies, with some adopting all EMA techniques while others adopting only the necessary practices. The challenges associated with EMA application were found to be; lack of guidance on EMA, absence of expertise on EMA, low awareness of environmental issues, lack of communication across departments and failure of existing regulatory approaches. In Kenya listed companies (who are more exposed to the society) have no pressure to adopt EMA. This could be linked to key challenges observed in this study of failing regulatory approaches. The Capital Markets Authority, the National Environmental Management Authority, Kenya National Cleaner Production Centre and other regulators are not doing enough to influence EMA adoption or ensure that companies are responsible for their environmental impact. There is need to have clear non-fragmented guidelines and regulations that would require environmental accountability for manufacturing companies. These regulatory bodies should therefore work together with UNDSD and UNEP to develop such regulations and guidelines for the manufacturing companies. Low levels of awareness and lack of expertise on EMA have been presented as key challenges to EMA adoption. The members of the public, shareholders and employees of companies need to be educated on the importance of EMA and Environmental accountability. The government, with the aim of attaining a green economy by 2030, should be in the forefront with this sensitization. The 2030 goal is national and yet many Kenyans are still not aware of it, yet they are required to be on-board in this journey to a green economy.