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SOCIAL RESPONSIVENESS TO GREEN ACCOUNTING OF GASOLINE AND OIL

INDUSTRY IN BORONGAN CITY, EASTERN SAMAR

An Undergraduate Thesis
Presented to the Faculty of the
COLLEGE OF BUSINESS MANAGEMENT AND ACCOUNTANCY
Eastern Samar State University

In Partial Fulfillment
of the Requirement for the Degree
BACHELOR OF SCIENCE IN ACCOUNTANCY

Bacula, Dea Lyn D.


Baldelobar, Richard A.
Bianes, Grecelyn C.
Galupe, Crisanto P.
Lira, Gerwin Jr. B.
Toledo, Sheldon Daryl G.

MAY 2018
TABLE OF CONTENTS
1 INTRODUCTION 2

1.1 Statement of the problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.2 Objective of the study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1.3 Significance of the study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1.4 Scope and limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1.5 Definition of terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2 REVIEW OF RELATED LITERATURE 10

2.1 Green or Environmental Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2.2 Social Responsibility Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.3 Corporate Social Responsibility to Environmental Accounting . . . . . . . . . . . . . . . . . . . . . 17

2.4 Theoretical Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2.5 Conceptual framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

3 METHODOLOGY 22

3.1 Research design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

3.2 Research locale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

3.3 Respondents of the study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

3.4 Sampling procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

3.5 Research instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

3.6 Data gathering procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

3.7 Data analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

4 BIBLIOGRAPHY 26

5 APPENDICES 32
LIST OF FIGURES
1 Relationship of Environmental information and social responsiveness to Green Accounting . . . . . . . . 21
LIST OF APPENDICES
Appendix 1: Letter of Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Appendix 2: Survey Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33


CHAPTER I

INTRODUCTION

Global warming, ozone depletion and environmental pollution are environmental concerns

that affect everyone (Ismael, 2017). In recent years, the negative environmental effect of economic

development has become a main concern of the public in the Philippines and all over the world.

Thus, these phenomenon alerts humans to the need to act responsibly with regard to the

environment because its gradual effect to the environment becomes more urgent concern on

economical, social and political problems.

The impact of any business activity in the environment is found in several forms: air, water,

underground pollution, drinking water, land and habitat for endangered and threatened species,

oceans, atmosphere, land mass etc (Yakon & Dorweiler, 2004). These are all accountable in every

business activity because it contributes to the adverse effect on the environment and its impact

needs to be considered and integrated into management decision and accounting reporting.

One of the industries that give greatest impact on the environment is the Gas and Oil

industry. According to the International Energy Agency, energy-related carbon dioxide (CO2)

emissions are the majority of global greenhouse gas (GHG) emissions, while oil and gas are the

largest source of fuel combustion emissions and responsible for approximately 53% of global

energy-related CO2 emissions in 2013.

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The overall environmental impact of its operations on natural environment is very high, as

the operations of this industry can cause air pollution and water pollution, both of which can be

detrimental to the natural environment. Several vital environmental incidents that occurred in the

oil and gas industry worldwide have revealed the significant impact of this industry’s activities on

the environment, which in turn have contributed to increasing concern of public and other

stakeholders regarding oil and gas companies’ environmental impacts. As a result, oil and gas

companies are facing increasing pressure to disclose information regarding their environmental

performance (Abdullah Hamoud Ismail, PhD, 2017)

There can be adverse effects on the environmental at each stage of oil and gas development,

production, transportation, and refining. Several environmental risks are inherent to oil and gas

activity – natural resource depletion, air emissions, interference in the territories, biodiversity

impacts, and waste disposal, to name just a few. In addition, oil and gas activity has the potential

to endanger the occupational health and safety of the people engaged in such activities (Eltaib

Elzarrouk, 2012)

With these effects to the environment on the activities of the gas and oil industry, green

accounting or environmental accounting has been a significant issue in addressing to this

shortcoming. One of these issues is capturing all the information, both financial and non-financial,

which relates to the environmental problems (Steadman et al. 1995). Lee (2007) also states that

environmental damage is presented as one of the problematic concerns for the company itself,

specifically for oil and gas companies. He concluded that most problematic risks in the extractive

industry are those associated with the environmental impacts of the company’s operations.

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The key role of environmental accounting is to facilitate disclosures regarding the

environmental responsiveness of the oil and gas industry. This is an important element which could

be used as a tool to influence society’s perception towards its operation. It is the reason why green

accounting has become the focus of the public and society. (Costosa, 2008)

To some extent, as a custodian and bearer of economic development of accounting and

reporting, accountants must not put down the lid on the effect of environmental issues on business

management, accounting, audit and disclosure system (Bassey, Effiok & Eton, 2013). They are

expected to take proactive role to protect the environment by accounting all business activity that

concerns the environment in conformity with the standards in accounting and reporting. At the

same time, the management of the company must take precautions in addressing these issues.

Borongan City being the capital in the Province of Eastern Samar has an increasing rate of

environmental issues such as the frequent devastation of typhoon and expected to multiply it in

the near future. It is indispensable for Gasoline and Oil industry to be socially responsible since it

is considered as one that has the greatest impact on the environment. For this reason, the practice

of green accounting is actually necessary for them to assess the effect of the environmental loss

the industry itself, but most especially to the society and environment at large. The negative impact

of this kind of industry has become controversial issues in the world particularly the operation for

this kind of industry is very pervasive to the environment and its different consequences would be

very dangerous to the human existence. Therefore, the top priority of this industry is to protect the

biodiversity and the ecosystem.

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Consequently and corresponding to this increasing attention, the oil and gas sector have

profound production impact in the environment, the conduct of this study has explored to the

assessment of different gasoline and fuel industry whether they adopt green accounting and

whether they include relevant environmental information and if such have been implemented, the

effect of it to the decision making of the users. In general, this study determines the degree of

compliance of the Gas and Oil industry to environment accounting and the predictors that affects

their corporate social responsibilities to environment accounting. Also, the study will assess if

these industry are favourable to address the need for environment accounting and reporting to their

respective books and to determine the problem they encountered in environmental accounting and

reporting.

Statement of the Problem

The study aims to answer the following questions:

1. What is the profile of the respondents in terms of:

a. nature of business;

b. person responsible and position for environmental accounting and reporting;

c. implementation of environmental accounting and reporting; and

d. Certification to any environmental bodies?

2. What is the level of compliance of the respondents to the voluntary disclosures of

environmental information in terms of the following:

a. general environmental policy;

b. pollution and waste management;

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c. sustainable use of resources;

d. climate change; and

e. protection of biodiversity?

3. What are the factors that predicts the corporate social responsibility (CSR) of the

respondents to environmental accounting in terms of the following:

a. size of the board of directors;

b. existence of board committees;

c. existence of safety and social responsibility;

d. profitability; and

e. financial leverage

4. Is there a significant relationship between the CSR to environmental reporting disclosures?

5. What is the respondents’ opinion on the need for environmental accounting and reporting

practices?

6. What are the problems encountered in environment accounting and reporting practices?

Objectives of the Study

1. To determine the profile of the respondents.

2. To determine the level of compliance to voluntary disclosures of the environmental

information to the respondents.

3. To determine the factors that predicts the corporate social responsibility of the respondents

to environmental accounting.

4. To determine the relationship between the corporate social responsibility of the

respondents to environmental accounting.

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5. To determine the respondents’ opinion on the need for environmental accounting and

reporting practices?

6. To determine the problems encountered in environment accounting and reporting practices.

Significance of the Study

In general, the study will help promote social responsibility among Gasoline and Oil

industries in Borongan City towards the compliance to Green Accounting

The result of the study will be beneficial to the Philippine Accounting and Reporting

Standard Committee to formulate a mandatory standard requirement for environmental

information disclosures and to account for an allocated cost to restore or minimize environmental

waste and pollution.

It will also be helpful to Gasoline and Oil industry to include as their corporate social

responsibility to comply with green accounting in their respective books.

This study will also be used as reference by the Bachelor of Science in Accountancy

students for any future related studies.

Aside from the above mentioned significance, this study will also be very useful for

environmentally conscious general public to determine which gasoline stations are ethically

responsible in attaining sustainable development of environment and eco-system in Borongan City

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and to institutions like Eastern Samar State University as data gathered can be incorporated to

classroom discussions.

Scope and Limitations

The study focused on assessing the degree of social responsiveness of gasoline and oil

industry with respect to disclosures in their financial statements and compliance to green

accounting.

The sample selected for the study suffers from many constraints. Sample was selected

within the geographical area of Borongan City. The selection of respondents was based on their

willingness to participate.

Definition of Terms

The following terms are functionally defined to help in the understanding of the study:

Gasoline and Oil industry. This will particularly refer to the businesses that are engaged

in trading fuels, gasoline, oil and lubricants for all type of vehicles.

Green accounting or Environmental Accounting. In this study, this refers to accounting

of environmental information, whether financial or non-financial, in the book of accounts of Gas

and Oil industry.

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Social responsiveness or Corporate Social Responsibility (CSR). Operationally, this

refers to the actions and/or methods adopted by the gasoline and oil industries in response to green

or environmental accounting

Social Responsibility disclosure. In this study, it refers to the reports presented by the

Gasoline and Oil Industry in their financial statements pertaining to the different

environmental/social activities conducted throughout the year.

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CHAPTER II

REVIEW OF RELATED LITERATURE

Today firms have proactively integrated concerns about the natural environment into their

business strategies. The need for Environmental Accounting has become the concern and focus of

nations and responsible corporate managements, it became one of the foremost issues on the

agenda of nations and businesses earlier in the 1990s and the reasons for this were various

emanating from both within and outside of the firm and particularly at the global level.

Among these businesses Hasan and Hakan (2012) said that oil companies nowadays cause

a lot of environmental problems because of profit maximization, the endless needs, rapidly

advancing technological developments, unconscious consumption of natural resources, as they

execute their operations. At first glance, these efforts in order to remove environmental pollution

mean additional cost to companies in the short term; nevertheless they can have a chance of cost

minimization in medium and long term and even additional income in this process.

On the other hand, despite its potential threats to the environment, the oil industry plays a

positive role in society as well, creating many jobs and generating a significant volume of tax

revenues and royalties to national governments. (Emilio Lèbre La Rovere, 2014)

Awareness of environmental limits has led to a proliferation of accounting methodologies

designed to measure the impact of human activity on the earth's ecological systems and resources.

Such methodologies can be collectively described as green accounting, and categorized in three

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different ways; first, by whose actions are being accounted for; second, by the time period being

considered; third, by how environment impacts are measured. Current practice tends to focus on

parallel reporting with financial accounting still having greater importance. Green accounting

remains largely voluntary and unaudited. The key challenges for green accounting can be

summarized as first to determining the scale of change in human activity required to prevent

environmental degradation and incorporating some reference to these limits within its metrics, and

second to be effective in prompting the necessary behavioral change within the necessary

timescale. (Tony Greenham2010)

Green or Environmental Accounting

Eze, Nweze and Enekwe (2016) states, that environmental accounting is an inclusive aspect

of accounting. They define environmental accounting as, it generates reports for both internal uses,

providing environmental information to help make management decisions on controlling

overhead, budgeting and pricing and external use, disclosing environmental information of interest

to the government, public and to the financial community. The need to account for environmental

information in the book of accounts is the primary purpose of green accounting. It enables the

management to disclose environmental information for policy and decision making.

Similarly, Stanko et al. (2006) said that ‘environmental accounting is the identification,

measurement and allocation of environmental costs, the integration of these environmental costs

into business decisions, and the subsequent communication of the information to the stakeholders.’

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Meanwhile, Gray and Bebbington (2006) emphasized that environmental accounting is not

only about accounting for the environment; rather it is also to the extent that environmental issues

can be reflected in conventional accounting practice. This is with the view of improving the

condition of the natural world such as reduced land degradation and pollution abatement which

enhance sustainable development.

Because of the increasing pressure on environmental activities of these industries, Bassey

Eyo Bassey, Sunday O. Effiok and Okon E. Eton (2013) said that Environmental accounting would

aid the discharge of the organizations accountability and increase its environmental transparency,

it helps negotiation of the concept of environment and determines the company’s relationship with

the society in general and the environmental pressure group in particular. This helps an

organization seeking to strategically manage a new and emerging issue with its stakeholders.

Yokhou and Dorweiler (2004) stresses that providing environmental reports, can be an effective

factor for internal and external users. The environmental information is used by internal users for

decision making, controlling overhead and capital budgeting: also environmental accounting could

be used to disclose the information externally to the public and financial communities.

There is really a need to adopt environmental accounting not only because these industries

are being publicly pressured to adopt environmental initiatives, Bassey Eyo Bassey, Sunday O.

Effiok and Okon E. Eton (2013) said that, ‘companies engaged in environmentally unfriendly

industries arose strong public emotion. There is a strong environmental lobby against these

industries. Green reporting may be used to combat potentially negative public opinions.’, but

simple because they are major contributors to the increasing environmental problems faced by the

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entire world. ‘Oil and gas industry is one of the 5 most environmentally sensitive industries, and

it is more likely to respond to any environmental event.’(Deegan and Gordon ,1996)

And therefore it is only reasonable that they actively participate in different environmental

initiatives. As what Abdullah Hamoud Ismail, PhD (2017) said, ‘It is generally recognized that

environmental reporting for the petroleum industry is important because oil and gas activity has a

profound effect on the natural environmental.’

Though exercising different environmental activities or adopting green accounting would

mean additional costs to these businesses, equal amount of benefits can also be expected from

adopting or exercising it to the organization itself and the society where it operates, as Rahaleh

(2004) said ‘the primary benefit to the organization is that, by improving the company’s

environmental performance, there is foreseeable enhancement of economic performance because

the company becomes more attractive to investors’ Similarly Toms (2002) said that environmental

accounting ‘helps the organization to improve its competitive advantage by enhancing the

environmental performance as well as improving the reputation of the organization.’

Bassey Eyo Bassey, Sunday O. Effiok, and Okon E. Eton states in their journal that ‘it has

been revealed that environmental accounting and reporting enhances organizational performance

of the selected oil company, that those environmentally friendly organizations who voluntary

discloses their environmental activities enjoy high level of competiveness.’

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Social Responsibility Disclosures

Kaya (2016) mentioned that social and environmental reporting issues are often referred to

as sustainability reporting or Corporate Social Responsibility reporting. It is based on the social,

environmental and governance information.

Environmental Accounting Disclosure according to Van de Burgwal and Vieira (2014) can

be defined as ‘public reports by companies to provide internal and external stakeholders with a

picture of corporate position and activities on economic, environmental and social dimensions.

In other words these are reports that contain or illustrate the entity’s contribution towards

sustainable development.’

Simply stated Andria Perciaccante Community Manager at Optimy (2016) said, ‘Social

responsibility disclosure refers to the argument that corporate or business organisations are obliged

to contribute and solve the many social and environmental issues that affect the world.’

According to the study of Cho, Chen and Roberts (2008) environmental disclosure is a key step in

applying environmental accounting and mentioned some criteria which are important for

environmental disclosure. These criteria are the organizations have to disclose financial

information such as compliance costs, contingent liabilities and lawsuits, and nonfinancial

information, which relate to the environmental issues such as sculpture dioxide emissions or toxic

chemical spill.

Smith (2003) said that ‘once environmental risks have been identified, the auditor must

check for compliance with accounting standards.’

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Every organization has to provide information to various users whether they are internal

users such as employees or external users such as government. This information could be

classified into two types, mandatory and voluntary. Mandatory information is that which appears

in the director’s report in accordance with the requirements of corporation’s law. On the other

hand, voluntary environmental disclosures are those appearing in sections other than the directors’

report, the voluntary sections of the report permit a greater amount of discretion to the organization

in relation to the content of material included, as they are not mandatory (Cowan & Gadenne,

2005: 167).

According to the Code Grenelle II (Kaya, 2016), environmental information must reflect

the company’s general environmental policy, pollution and waste management, sustainable use of

resources, action against the climate changes and actions to protect the biodiversity. The table

below shows the relevant environmental information and the topics to be disclosed:

Table 1. Environmental Information According to the Code Grenelle II

Information Topics
a. General environmental  Company efforts to take into account environmental
policy issues and, where appropriate,
 assessments or environmental certifications
 Employee training programs on environmental
protection
 Resources devoted to prevention of environmental
risks and pollution
 Financial provisions for environmental risks

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b. Pollution and waste  Measures to prevent, reduce, or compensate for air,
management water, and soil emissions severely
 affecting the environment
 Measures to prevent, recycle, and dispose of waste
 Taking into account noise and other forms of pollution
c. Sustainable use of  Water use and water supply based on local constraints
resources  The consumption of raw materials and measures taken
to improve their efficiency
 Energy consumption, measures to improve energy
efficiency, and percentage of renewable
 energy used
 Land use
d. Climate change  Greenhouse gas emissions
 Adaptation to climate change impacts
e. Protection of  Measures taken to preserve or enhance biodiversity
biodiversity

According to Cowan and Gadenne (2005), the mandatory information provides users of the

annual report with a factual account of the organization's compliance with regulations during the

period of reporting. Also they state that the mandatory disclosures will place reporting companies

in a position of increased scrutiny.

On the other hand, Voluntary disclosure is considered in the decision-making process of

several user groups. ‘Organizations provide voluntary disclosure not only as a means to satisfy the

user’s right to know, but also as a way in which the organization would be deemed legitimate by

society and subsequently reap the rewards of such legitimacy’ (Eltaib, 2012: 31). This constitutes

an effort on the management accountant’s behalf to portray the most suitable information. Thus,

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according to (Lee, 2005) ‘managerial accounting can help organizational managers determine how

to approach environmental reporting’ (Lee, 2005: 8). Management accounting can be useful in the

control of environmental costs by providing a wealth of information, which is relevant to the

environmental issues and useful for decision–making. Furthermore, Lee (2005) concludes that

‘managerial accounting is the best way to reach the peak firm performance.’. "An environmental

management system is a management system that aims to encourage an organization to control its

environmental impacts and reduce such impacts continuously" (Lee, 2005: 10). This implies that

voluntary disclosure assumes a twofold objective.

Corporate Social Responsibility to Environmental Accounting

The environmental reporting or sometimes known as “green reporting” is one of the

voluntary social reporting included in the financial statement. According to many scholars, the

concept of CSR refers to ‘the social and ethical responsibilities that companies are expected to

undertake toward societies. Many parties have put pressure on apparel companies to behave more

responsibility toward the environment by adopting more eco-friendly production methods.’ Social

responsiveness on the other hand, ‘refers to the way that companies interact with societies’

pressure and expectations regarding its social or environmental responsibilities.’ The concept of

social responsiveness could be materialized by companies’ environmental and sustainability

programs that aim to minimize the harm on the environment and the natural resources.’ (Sultan

Alahmar, 2016).

The growing concern over the social and environmental impact of business and the impact

of social and environmental issues has lead companies to actively account for and manage their

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sustainability footprint (Adams and Frost, 2008). One way of addressing to this issue directed

towards establishing integration between the ethical, social, environmental and economic

performance within corporate reports (Adams and Frost, 2008).

According to Guller and Crowher (2008), there are four principles of good corporate

governance namely: (1) transparency, (2) accountability, (3) responsibility and (4) fairness. They

believed that to address these points of sustainable value creation, achieving the firm’s goals and

keeping a balance between economic and social benefit. Although there were rebuttable issues

regarding the relevance of CSR disclosures in annual report, some studies focused on the

relationship between firms’ characteristics and disclosure (Güler and Crowther, 2008; Chiang and

Kuo, 2006; Janggu, Joseph, and Madi, 2007) while others focused on the benefits of CSR

disclosure (Said, Zainuddin, and Haron, 2009) which in turn in argued to be directly related to the

sustainability of a firm (Güler and Crowther, 2008).

A study conducted in Malaysia revealed that relationship between CSR and corporate

governance characteristics (Said et. al., 2009). The corporate governance characteristics are

attributed as to: board size, board ownership, board professionalism, board independence, board

designation and members of the board. Based on the study, they concluded that government

ownership and audit committee were found to have a positive and significant relationship with the

level of CSR disclosures. With regards to directors’ ownership as measured by the percentage of

shares held by the executive directors, findings from prior literature were mixed. Zahra (1989)

found a negative association with CSR practices in Malaysia, while Ghazali and Weetman, (2006)

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found a strong effect on voluntary disclosure. However, Said et al. (2009) found no such

relationship.

However, the relationship between board size and CSR was inconclusive. Jensen (1993)

concluded that larger board is less effective in coordinating communication and decision making

and is more likely to be controlled by the CEO. On the other hand, board size was found to be

negatively related with firm value (Naveen Kumar and Singh, 2013; Ujunwa, 2012) but was

statistically rejected by Said et al. (2009) with regards to CSR performance in Malaysia.

The existence of such a committee would lead to an increasing importance given to these

particular aspects of the governance system, and as a result, an increase in the information related

to the social and environmental performance of the company. Firms with an environmental

committee are also more likely to publicly disclose their emissions levels and present a more

credible disclosure, on a voluntary basis, in order to indicate to climate change. It is believed that

the commitment committee, however, shows evidence that proactive corporate governance is used

to guide the organizational long-term strategy towards a more carbon constrained future Rankin et

al., 2011.

Lastly, Junaina and Ahmad (2008) identified the main determinants of environmental

reporting to include: (1) Company size; (2) Financial leverage; (3) Profitability; (4) Effective tax

rates; (5) Industrial membership; and (6) audit firm. Bassey, Sunday and Effiok (2013) concluded

that, voluntary disclosure of environmental information in the annual report is positively related

to firm’s size. This is supported by Jensen and Meckling (1976) when they found a positive

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association between size and voluntary social responsibility disclosure; they argue that firms which

are more visible in the public eyes are likely to have voluntary disclosure information to enhance

their corporate reputation.

Theoretical Framework

The following are the theories used in the study:

Agency theory, the company is accountable for the decision to report environmental

information, decision made by the management in order to serve the interests of the shareholders

Buniamin et al., 2011. Kolk (2006), considering that for increasing the shareholders insight and

for influencing the corporate behavior, emphasis should be made on the internal context.

Stakeholders theory, it emphasized that the organization’s survival requires stakeholder’s

support and approval. Bassey, et. al. (2013) highlighted that stakeholders are groups which are

influenced by the corporate activities or which can affect the corporation. This approach is

extended to stakeholder’s theory by explaining information disclosure as an obligation and the

right of the stakeholders. It further states that, the more powerful the stakeholders are the more the

organization must adapt to their interests and demands.

Legitimacy theory is a generalized perception or assumption that the actions of an entity

are desirable, proper, or appropriate within some socially constructed system of norms, values and

definitions (Suchman, 1995). According to Tilling (2008), legitimacy theory offers a powerful

mechanism for understanding voluntary social and environmental disclosure made by

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corporations, and that this understanding would provide a vehicle for engaging in critical public

debate.

Positive Accounting Theory. This theory suggests and explains why firms make voluntary

social disclosures. Based on the original work of Watts and Zimmerman 919986), the positive

accounting theory have directly sought to establish evidence for the political cost hypothesis as an

explanation for firms social disclosures.

Conceptual Framework

Environmental Social Responsiveness


Information to Green Accounting

Figure 1: Conceptual Framework

Figure 1 shows the relationship between the environmental information and the social

responsiveness to green accounting. It seeks to determine which among the environmental

information correlates to the CSR.

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CHAPTER III

METHODOLOGY

Research Design

Descriptive research method is the process of describing a population as it is without

prescribing some theory describing the same population (Dressos, 2014). Simply stated, it

describes the situations and is concerned with the present condition and its relationship to a

particular phenomenon.

Descriptive researches are valuable in: (1) providing facts on which scientific judgment

may be based (2) essential knowledge about the nature of objects and persons (3) for clear

observation into the practices, behaviour, methods and procedures (4) playing a large part in the

development of instrument for the measurement of many things, and (5) formulating of policies in

the local, national, or international level (Calmorin, 2007).

In view of these, the study will use the descriptive type of research. A questionnaire is

provided for each respondent to gather data and evaluate their social responsiveness to Green

Accounting.

Research Locale

The study will be conducted in the City of Borongan, Eastern Samar, Philippines. It is a

component city and the provincial capital of the province of Eastern Samar.

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Research Respondent

The respondents of this study are the Gasoline and Fuel stations situated within the limits

of Borongan City. From Jidcar Gasoline Stations situated in Brgy. Can-abong to Galaxy Fuels

situated in Brgy. Hindang Borongan City.

Sampling

The data gathered from the Department of Trade and Industry (DTI) provides that there are

only nine (9) registered stations in Borongan City, Eastern Samar. Hence, total sampling is used

in this study.

Research Instrument

The researchers of this study used a self-made survey questionnaire to obtain relevant

data’s from the respondents that are to be used in this study. The self-made survey questionnaire

is divided into 5 sections.

The first section determines the profile of the respondents in terms of the nature of its

business, position of the responsible person for environmental accounting and reporting,

implementation of environmental accounting and reporting and certification applied. It contains a

checklist type of questions wherein answers are provided for the respondents to choose from.

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The second section pertains to the level of compliance of the respondents to green

accounting. It contains a checklist of responses of the respondents whether they are 5 – Extremely

Compliant; 4- Highly Compliant; 3 – Complaint; 2 – Fairly Complaint and 1 – Poor Compliant.

The third section contains questions aimed to identify the factors affecting the corporate

social responsibility of the respondents to environmental accounting. The respondents will check

on their responses as to: 5 – Strongly agree; 4- Agree; 3 – Neutral; 2 - Disagree agree and 1 –

Strongly Disagree.

The fourth section contains the opinion of the respondents as to the need for an

environmental accounting and reporting practices. The respondents will check on their responses

as to: Highly Essential, Essential, Neutral, Not Essential and Not at all Essential.

Lastly, the fifth section contains the problems encountered in environmental accounting

and reporting practices.

Data Gathering Procedures

The questionnaires will be distributed personally to the respondents in which they are

expected to answer honestly. The researchers will adhere to some ethical requirement especially

on confidentiality aspect because some of the data or information will require disclosures from

their respective book of accounts.

After which the respondent will collect it immediately for data analysis.

24
Data Analysis

After data gathering, answers will be examined for correctness and completeness, and will

be organized and analyzed. An analysis of descriptive responses according to its descriptive

statistics such as mean and percentage count were employed to summarize all responses of the

Gasoline and Oil industries in Borongan City. All descriptive statistics were made to display results

with respect to each research questions.

Frequency and Percentage Count is the rate of occurrence for each intention is determined

by dividing the number of occurrence by the total numbers of respondents. It is used to determine

the percentage of response. This statistical tool will be used to determine the profile of the

respondents, opinion of the respondents to the need of environmental accounting and reporting

and the problems encountered in environmental accounting and reporting.

Mean is a point between extremes, it is a value that is computed by dividing the sum of a

set of terms by the number of terms. The mean will be used in the study to quantify the results on

the level of compliance to voluntary disclosure to environmental information and the factors that

predicts the corporate social responsibility to environment accounting.

Step-wise regression analysis will be used to analyze the relationship between the level of

compliance to voluntary disclosure to environment information and the CSR.

25
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APPENDIX: SURVEY QUESTIONNAIRE

Republic of the Philippines


EASTERN SAMAR STATE UNIVERSITY
http://essu.edu.ph
________________________________________________________________________

Dear Valued Respondent,

This questionnaire is designed strictly for purpose of academic research of the


Accountancy students of Eastern Samar State University entitled, “ SOCIAL
RESPONSIVENESS TO GREEN ACCOUNTING OF GASOLINE AND OIL INDUSTRY
IN BORONGAN CITY, EASTERN SAMAR”. The study is for developing environmental
accounting and reporting aimed at enhancing eco-efficiency in the Borongan City. It is hoped that
the outcome of the research will be beneficial to the environment and economy. Rest assured that
any information gathered will be used for the sole purpose of this research and be held in utmost
confidentiality.

Thank you for your kind response and participation in this study!

Respectfully,

THE RESEARCHERS

32
I. PROFILE OF THE RESPONDENTS

Name of the business: ________________________________

Address: ___________________________________________

1. What type of business is your oil and gasoline station?

Sole Proprietorship

Franchise

Partnership

Corporation

2. Does your business have at least one person with explicit responsibility for environmental

concerns?

Yes

No

3. What is the position of this person in your business?

Senior management

Production/operations

Finance/accounting

Specialised environmental department (or equivalent)

Others (please specify) ______________________

4. Has your facility actually implemented environmental accounting disclosures?

Yes In progress No

33
If yes, has your facility acquired any of the following certifications in environmental
accounting?
Yes No Year
DENR _____
EMAS _____
ISO 14001 _____

II. LEVEL OF COMPLIANCE TO VOLUNTARY DISCLOSURES OF ENVIRONMENT


INFORMATION
Instruction: Please put a check mark for the number which correspond your answer.

1 – Not Compliant

2 – Fairly Compliant

3 – Compliant

4 – Highly Compliant

5 – Extremely Compliant

Voluntary Disclosures of Environmental Information 5 4 3 2 1


A. General Environmental Policy
1. Company efforts to take into account
environmental issues and, where appropriate,
assessments or environmental certifications.
2. Employee training programs on environmental
protection.
3. Resources devoted to prevention of environmental
risks and pollution.
4. Financial provisions for environmental risks.

34
B. Pollution and Waste Management
1. Measures to prevent, reduce, or compensate for air,
water, and soil emissions severely affecting the
environment.
2. Measures to prevent, recycle, and dispose of waste.
3. Taking into account noise and other forms of
pollution.
C. Sustainable Use of Resources
1. Water use and water supply based on local
constraints.
2. The consumption of raw materials and measures
taken to improve their efficiency.
3. Energy consumption, measures to improve energy
efficiency and percentage of renewable energy
used.
4. Land use.
D. Climate Change
1. Greenhouse gas emissions.
2. Adaption of climate change impacts.
E. Protection of Biodiversity
1. Measures taken to preserve or enhance
biodiversity.

III. FACTORS THAT PREDICTS THE CORPORATE SOCIAL RESPONSIBILITY TO


ENVIRONMENTAL ACCOUNTING
Instruction: Please put a check mark for the number which correspond your answer.

1 – Strongly Disagree

2 – Disagree

3 – Neutral

35
4 – Agree

5 – Strongly Agree

Predictors 5 4 3 2 1
A. Size and Existence of the Board of Directors
A larger board size can bring directors with experience
that may represent multitude of values in the board.
B. Existence of Safety and Social Responsibility
Committee
The existence of safety and social responsibility would
lead to an increasing importance given to these particular
aspects of the governance system, and as a result, an
increase in the information related to the social and
environmental performance of the company.
C. Profitability
More profitable firms are more likely to disclose more
while less profitable firms tend to more secretive.
E. Financial Leverage
Companies with high leverage may disclose more,
information to satisfy the needs of long-term creditors and
to remove suspicious of debt holders regarding wealth
transfer. Moreover, level of voluntary disclosure increases
as the leverage of firm grows.

IV. OPINION ON THE NEED FOR ENVIRONMENTAL ACCOUNTING AND


REPORTING PRACTICES
Instruction: Please put a check mark for the number which correspond your answer.

1. What is your view regarding the need for Environmental Accounting and Reporting Practices?

Highly Not Not at all


Essential Neutral
Essential Essential Essential

36
Need for Environmental Accounting
Need for Environmental Reporting

V. PROBLEMS ENCOUNTERED IN ENVIRONMENTAL ACCOUNTING AND


REPORTING PRACTICES
Lack of knowledge and training of staff on Environmental Accounting and
Reporting
Lack of qualified and trained staff
Lack of policies and management support regarding Environmental Accounting
and Reporting
Lack of professional guidelines regarding Environmental Accounting and
Reporting
Lack of favorable attitude of the Accounts Department staff regarding
Environmental Accounting and Reporting
Lack of provision in any law regarding Environmental Accounting and
Reporting
Other, please specify: _______________________________________

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