Examining distinct carbon cost structures and climate change abatement strategies in CO2polluting firms

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 CO2emission 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 CO2emission 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 - CO2polluting 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 CO2emission reduction when firms pursue a growth strategy. Social implications - Global warming signifies that CO2emissions constitute a social problem. The study has the potential to raise societal awareness that the causality of the manufacturing sector’s CO2emissions 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 CO2emissions. In addition, it provides distinctive support for the view that eco-efficiency is more consistent with the economic than the environmental pillar of sustainability.