Environmental and Carbon Costing Systems: A Systematic Review of Green Cost Accounting Practices

Abstract

This systematic review focuses on the history of environmental and carbon costing systems, its application, and development of the methodology in the industries and international environment. The review is a synthesis of evidence by key frameworks of Environmental Management Accounting (EMA), Material Flow Cost Accounting (MFCA), Full Cost Accounting (FCA), carbon foot printing methods, and internal carbon pricing mechanisms. It has been found that these costing systems are very important in enhancing cost visibility, waste streams, resource efficiency, and corporate sustainability strategies. MFCA and EMA continue to represent the most common form of implementation, especially in manufacturing and high impact industries whereas carbon accounting and pricing instruments become even more popular in support of making investment decisions and estimating climate risks. Although they have potential, adoption is not even because not all are measured, standard guidelines are not used, data quality is not always good, especially with Scope 3 emissions, and is not well integrated with financial reporting. There is also a lack of longitudinal studies, and SMEs and developing economies are underrepresented using empirical evidence. The review also indicates an increasing interest in digitalization, such as AI monitoring and real time emission tracking, but they are not in practical use. The improvement of methodological consistency and the broader and more extensive research in a variety of industry and other geographic settings will help to develop green cost accounting and aid low carbon decision making.