The impact of environmental cost accounting on business decision-making

Abstract

This article analyzes the impact of Environmental Cost Accounting (ECA) as an effective tool that integrates into accounting records the use of resources, emissions, waste, treatment, mitigation, regulatory compliance, among other factors, with a view toward corporate sustainability and decision-making. Through a bibliographic inquiry, the effects of its implementation were examined, incorporating international standards such as IFRS S1 and S2, ISO 14000 standards, and the Sustainable Development Goals. From a qualitative approach and based on the PDCA (Plan, Do, Check, Act) continuous improvement cycle, the study seeks to explain the level of environmental, financial, and operational performance. The results show that ECA helps reduce legal, environmental, financial, and other types of risks. The research determined that ECA is an indispensable tool for addressing climate challenges, enhancing the effectiveness of environmental planning and management in companies with respect to national and international obligations. It also enables a clear accounting distinction between private and public companies, allowing for greater transparency in how environmental costs are recognized, measured and recorded; thus highlighting its benefits and the urgency of its implementation. Current academic discussion centers on the need to address risks through training and evaluation of the areas responsible for adopting rigorous methods to identify, measure and assess environmental risks. The literature shows a growing need to apply rigorous methods for identifying and evaluating environmental risks, supported by training processes and the involvement of responsible actors. Although some organizations still lack sufficient information, the reviewed studies agree that the implementation of environmental cost accounting strengthens decision-making, generates competitive advantages, and improves the capacity to adapt to regulatory requirements. Furthermore, this tool is recognized for promoting sustainable business practices by integrating economic and environmental impacts, thereby consolidating itself as a strategic resource to improve organizational performance and ensure long-term sustainability.