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The phenomenon of China’s carbon accounting policies and practices

Shuwen Li (Faculty of Business and Economics, Universiti Malaya, Kuala Lumpur, Malaysia)
Zarina Zakaria (Faculty of Business and Economics, Universiti Malaya, Kuala Lumpur, Malaysia)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Article publication date: 24 September 2024

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Abstract

Purpose

This study aims to explore China’s carbon accounting policies and practices to enhance its carbon accounting and trading practices and achieve carbon neutrality.

Design/methodology/approach

This study adopts a phenomenological methodology to explore carbon accounting by setting the scope of the phenomenon, establishing research methods, conducting interviews with 30 participants from 14 emitting entities and four accounting firms and establishing methods for data analysis. Five themes were identified using a five-step coding method.

Findings

The results show no uniformity in the accounting treatment of carbon trading; however, common characteristics exist, and they have generally adopted simplified and conservative accounting methods under China’s emission trading scheme. Their common characteristics are that the granted allowances are not recognised as assets by most emitting entities, emissions allowance assets are measured using the historical cost method, most emitting entities only conduct accounting when there are actual cash flows or outflows with regard to carbon emissions allowance trading, and only a few emitting entities disclose carbon trading information in their financial statements or corporate social responsibility reports.

Originality/value

This study highlights accountants’ crucial role in carbon activities by guiding emitting entities’ low-carbon initiatives and culture and transforming managers’ mindsets. It also introduces the China Accounting Standards Committee-based accounting methods for allowances and obligations, aiding carbon disclosure quality and sustainability. These findings also inform the carbon accounting standards that may enhance corporate accountability and address climate change.

Keywords

Citation

Li, S. and Zakaria, Z. (2024), "The phenomenon of China’s carbon accounting policies and practices", Journal of Accounting & Organizational Change, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JAOC-03-2024-0094

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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