Effect of green accounting practices on financial Performance of commercial banks in Nairobi county, Kenya

Abstract

Incorporating sustainability into accounting systems is necessary since environmental issues are becoming a crucial component of contemporary economic and financial decision-making. Everything pertaining to the production, use, handling, transportation, and disposal of products is included in green accounting. Corporate strategies, including operations and commercial performance, are being reevaluated by organizations due to environmental protection and the financial strain on industry. Implementing these management programs affects the company's operational, financial, and environmental performance. The purpose of this study was to ascertain how Kenyan commercial banks' financial performance was impacted by green accounting methods. Establishing the impact of green accounting environment regulations, figuring out the impact of green lending, evaluating the impact of green goods, and learning more about the relationship between green processes and Kenyan commercial banks' financial performance were the goals. A correlational descriptive design was used in the investigation. All 38 of Kenya's commercial banks were the focus of the investigation. Both primary and secondary sources of data were gathered. The Kenyan commercial banks' public financial reports provided secondary data on ROI. A structured questionnaire that was distributed utilizing the "drop and pick later" approach was used to gather primary data. To evaluate the validity and reliability of the research tool, pilot testing was done. The findings indicated a magnitude 0.008 connection between the independent factors and financial performance. Additionally, there was a strong association between the independent variables and P-values. The results also demonstrate that a unit rise in the policies and objectives of green operations practices will result in a 0.161 decline in the banks' financial performance when all other independent variables are set to zero. The banks' financial performance would drop by 0.085 for every unit rise in green lending operating practices. For every unit increase in products and services, the bank's financial performance would grow by 0.156, and for every unit increase in processes and procedures, the financial performance. The P-values were more than 0.05, indicating that none of the variables were significant. According to the report, all banks should conduct environmental audits and provide training sessions to raise knowledge of green operations and improve commercial banks' financial performance. According to the report, bank management should develop initiatives to educate staff members about green operating practices tailored to commercial bank workers. Every financial institution in Kenya ought to do a research of this kind. This will be crucial for extrapolating the results of the study on how financial institutions' financial performance is affected by the implementation of green operational techniques.