The Role of Environmental Accounting in Enhancing Sustainability Reporting Quality: A Descriptive Review

Abstract

Due to the increasing pressure from regulations and society on companies to disclose their environmental operations, environmental accounting has been established as an important tool for improving sustainability reports. The article intends to analyze the role of environmental accounting on the quality of sustainability disclosure by focusing on its trends, challenges, and benefits. A structured narrative review method was applied to analyze 46 articles published in peer-reviewed journals for about the last 10 years (2016-2026). The study finds several important trends including the combination of environmental accounting with sustainability disclosures like GRI and ISSB, applying digital technologies and AI for environmental performance measurement, introduction of the Double Materiality concept in reports, and the environmental accounting expansion to the public sector. Among challenges discovered through the review process are absence of unified global reporting standards, Greenwashing risks, and weak verification systems available, the gap in environmental information infrastructure, barriers to implementing environmental accounting in small and medium businesses, and regional differences in application of best practices. Among the known benefits are the improvement of environmental performance measurement and management, increase in investor trust and reputation of institutions, improvement of transparency and accountability, decrease in the cost of capital, and attraction of sustainable investment. The research indicates that having integrated environmental accounting systems with the capacity to support sustainable decision-making is necessary, and proposes the need to unify global environmental reporting standards and increase supervisory over the accuracy of provided “green” information with the help of modern technologies.