Relationship Between Greenhouse Gas Emissions and Accounting Variables According to the Environmental Kuznets Curve Hypothesis




Environmental Kuznets Curve, Greenhouse Gas Emissions, Accounting Variables


Objective: Considering that entities' activities are reflected and represented in their financial-accounting statements, this study aimed to analyze the relationship between greenhouse gas emissions and the entities' operating income and the accounting variables net intangible, amortization, net property, plant and equipment, depreciation, and research and development (R&D), considering the environmental Kuznets curve. 

Method: Application of panel regression on a sample of 682 companies from 40 countries belonging to 11 different sectors, which disclosed their scope 1 GHG emissions from 2012 to 2019 in the Thomson Reuters Refinitiv Eikon database.

Results: The results indicate a relationship between GHG emissions, as predicted by the Environmental Kuznets Curve Hypothesis (EKCH). These emissions graphically draw an inverted U-shaped curve, in which, due to the scale effect, there is an increase in greenhouse gas emissions as the entity's operating income increases. However, according to the composition effect, as companies use a greater amount of net intangibles and fewer net property, plant and equipment (captured by the "depreciation" variable), their emissions decrease. Nevertheless, with the technique effect, it was not possible to identify a significant relationship with GHG emissions.

Contributions: This understanding of the relationship between accounting variables and greenhouse gas emissions can help regulatory bodies in developing metrics and disclosure standards for climate-related business information, improving quality, comparability and their reliability. This fact can influence the assessment of the value of entities when considering the risks and opportunities related to their environmental impacts.


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How to Cite

Machado dos Santos, L. J., Ribeiro, M. de S., & Kouloukoui, D. (2023). Relationship Between Greenhouse Gas Emissions and Accounting Variables According to the Environmental Kuznets Curve Hypothesis. Advances in Scientific and Applied Accounting, 16(3), 245–257/258.