Examining distinct carbon cost structures and climate change abatement strategies in CO2 polluting firms

Abstract

Purpose – A management accounting perspective that underscores a quest for reducing conventionally
 appraised costs, negative output costs as well as heightened eco-efficiency has been used in pursuit of the
 study’s two main study objectives. The purpose of this paper is twofold: first, the study seeks to further
 understanding of the relationship between product output volume, carbon costs, and CO2 emission volume in
 carbon-intensive firms. Second, it identifies factors affecting climate change abatement strategies pursued by
 these firms. Heightening appreciation of the climate change challenge, combined with minimal CO2 emission
 research undertaken from a cost management perspective, underscores the significance of the study.
 Design/methodology/approach – A triangulation of quantitative and qualitative data collected from
 Slovenian firms that operate in the European Union Emissions Trading Scheme has been deployed.
 Findings – CO2 polluting firms exhibit differing carbon cost structures that result from distinctive drivers of
 carbon consumption (product output vs capacity level). Climate change abatement strategies also differ
 across carbon-intensive sectors (energy, manufacturing firms transforming non-fossil carbon-based
 materials, and other manufacturing firms) but are relatively homogeneous within them.
 Practical implications – From a managerial perspective, the study demonstrates that carbon efficiency
 improvements are generally not effective in triggering corporate CO2 emission reduction when firms pursue a
 growth strategy.
 Social implications – Global warming signifies that CO2 emissions constitute a social problem. The study
 has the potential to raise societal awareness that the causality of the manufacturing sector’s CO2 emissions is
 complex. Further, the study highlights that while more efficient use of environmental resources is a
 prerequisite of enhanced ecological sustainability, in isolation it fails to signify improved ecological
 sustainability in manufacturing operations.
 Originality/value – The paper has high originality as it reports one of the first management accounting
 studies to explore the distinction between combustion- and process-related CO2 emissions. In addition, it
 provides distinctive support for the view that eco-efficiency is more consistent with the economic than the
 environmental pillar of sustainability.

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