Carbon Accounting in the Oil and Gas Industry: Regulatory Obligations or Corporate Legitimacy Strategy?

Siti Bunayyah Fakhirah; Rina Tjandrakirana

doi:10.61536/escalate.v1i01.468

Authors

Siti Bunayyah Fakhirah Sriwijaya University
Rina Tjandrakirana Sriwijaya University

DOI:

https://doi.org/10.61536/escalate.v1i01.468

Keywords:

Carbon Accounting, Oil and gas Industry, Legitimacy, Regulation, Sustainability

Abstract

Climate change and the increase in carbon emissions are prompting the oil and gas industry to adopt carbon accounting practices. Nevertheless, in Indonesia, this initiative lacks robust regulatory backing, leading to doubts about whether it is motivated by legal requirements or the pursuit of legitimacy. This research is focused on examining how regulations and stakeholder pressure influence this practice, using a qualitative literature review of studies sourced from Scopus, SINTA, and Google Scholar from 2021-2026. The findings indicate that the desire for legitimacy plays a greater role in driving carbon accounting than adherence to regulations. Additionally, it has a dual effect, imposing immediate costs and performance challenges while also offering long-term advantages such as enhanced reputation, increased investor confidence, and sustainability. Thus, carbon accounting functions both as a strategy for gaining legitimacy and as an investment in sustainability.

Downloads

Download data is not yet available.

References

Akhter, F., Hossain, M. R., Elrehail, H., Rehman, S. U., & Almansour, B. (2023). Environmental disclosures and corporate attributes, from the lens of legitimacy theory: a longitudinal analysis on a developing country. European Journal of Management and Business Economics, 32(3), 342–369. https://doi.org/10.1108/EJMBE-01-2021-0008

Ayodele, F. O., Ayodele, B. V., Oladele, T. O., Setyaningsih, T., & Munir, S. (2026). Carbon Disclosure Policy as a Strategic Driver for Carbon Emission Reduction: A Systematic Review and Quantitative Policy Synthesis. Environments - MDPI, 13(2), 1–27. https://doi.org/10.3390/environments13020115

Azzahra, A., & Hamzah, R. S. (2025). Carbon Emissions Disclosure in Asia-Pacific: the Role of Carbon and Financial Performance in High-Impact Sectors. Jurnal Akuntansi Bisnis, 18(2), 209. https://journal.ubm.ac.id/index.php/akuntansi-bisnis/article/view/8225

Bazhair, A. H., Khatib, S. F. A., & Al Amosh, H. (2022). Taking Stock of Carbon Disclosure Research While Looking to the Future: A Systematic Literature Review. Sustainability (Switzerland), 14(20), 1–24. https://doi.org/10.3390/su142013475

Dewi, C. K., Aprilia, J., & Indrawati, A. (2025). The Financial Implications of Carbon Transparency: Examining the Mediating Role of Emission Disclosure. Journal of Accounting and Strategic Finance, 8(1), 1–22. https://doi.org/10.33005/jasf.v8i1.564

Di Vaio, A., Van Engelenhoven, E., Raimo, N., & Garofalo, A. (2026). Strategic Carbon Disclosure and Accountable Efficiency: Reporting Shipping Industry Scope 3 Emissions. Business Strategy and the Environment, 35(1), 1003–1021. https://doi.org/10.1002/bse.70210

Downar, B., Ernstberger, J., Reichelstein, S., Schwenen, S., & Zaklan, A. (2021). The impact of carbon disclosure mandates on emissions and financial operating performance. Review of Accounting Studies, 26(3), 1137–1175. https://doi.org/10.1007/s11142-021-09611-x

Dragomir, V. D., Dumitru, M., & Perevoznic, F. M. (2023). Carbon reduction and energy transition targets of the largest European companies: An empirical study based on institutional theory. Cleaner Production Letters, 4(December 2022). https://doi.org/10.1016/j.clpl.2023.100039

Gamar, M. F. Al, & Widoretno, A. A. (2024). Keberlanjutan : Jurnal Manajemen dan Jurnal Akuntansi accounting on the firm value of Indonesia energy companies. Keberlanjutan : Jurnal Manajemen Dan Jurnal Akuntansi, 9(1), 1–12. https://doi.org/10.32493/keberlanjutan.v9i1.y2024.p1-12%0Ahttps://openjournal.unpam.ac.id/index.php/keberlanjutan/article/view/39813/19993

Gezgin, T., Özer, G., Merter, A. K., & Balcıoğlu, Y. S. (2024). The Mediating Role of Corporate Governance in the Relationship between Net Profit and Equity and Voluntary Disclosure in the Context of Legitimacy Theory. Sustainability (Switzerland) , 16(10). https://doi.org/10.3390/su16104097

Harnida, M., Bulkia, S., Nurhayati, N., Anshory, K., & Aulia Tambang, P. (2025). The Impact of Carbon Emission Disclosure On Firm Value With Sustainability Performance As A Mediating Variable: Evidence From Palm Oil and Mining Companies In Indonesia. International Journal of Science, Technology & Management, 6(6), 1071–1076. https://doi.org/10.46729/ijstm.v6i6.1370

Hikal, H. M. M., Abdalla, A. A. A., Babiker, I., Bilal, A. O. A., Babiker, B. B. A., Abdelraheem, A. A. E., & Gamer, S. D. (2025). Institutional Ownership and Climate-Related Disclosures in Malaysia: The Moderating Role of Sustainability Committees. Sustainability (Switzerland), 17(14), 1–29. https://doi.org/10.3390/su17146528

Houten, E. S., & Wedari, L. K. (2023). Carbon Disclosure, Carbon Performance, and Market Value: Evidence from Indonesia Polluting Industries. International Journal of Sustainable Development and Planning, 18(6), 1973–1981. https://doi.org/10.18280/ijsdp.180634

Izzo, T., Evangelista, L., Mancini, D., & Risaliti, G. (2026). Determinants of Corporate Carbon Disclosure: A Systematic Framework and Agenda for Future Research. Accounting and Finance, 1–14. https://doi.org/10.1111/acfi.70180

Krasodomska, J., Zarzycka, E., Street, D. L., & Grabowski, W. (2025). The impact of companies’ trust-building efforts on sustainability reporting assurance quality: insights from Europe. Meditari Accountancy Research, 33(7), 246–279. https://doi.org/10.1108/MEDAR-05-2024-2496

Kurniawan, A., & Restie Utami, Z. (2025). Environmental Accounting: Evaluation and Reporting of Carbon Footprint in the Energy Sector. Fidusia : Jurnal Keuangan Dan Perbankan, 8(1), 99–110. https://doi.org/10.24127/jf.v8i1.2568

Liu, Y. S., Zhou, X., Yang, J. H., Hoepner, A. G. F., & Kakabadse, N. (2023). Carbon emissions, carbon disclosure and organizational performance. International Review of Financial Analysis, 90(August), 102846. https://doi.org/10.1016/j.irfa.2023.102846

Ma, S., Lei, T., Meng, J., Liang, X., & Guan, D. (2023). Contributions of key countries, enterprises, and refineries to greenhouse gas emissions in global oil refining, 2000–2021. Innovation, 4(1). https://doi.org/10.1016/j.xinn.2022.100361

N, A., Suraj, N., Keyur, K. K., Bhadeshiya, H., Kulal, A., & Divyashree, M. S. (2025). Carbon management accounting an evolving approach to enhance transparency and accountability in accounting and reporting practices. Journal of Accounting and Organizational Change, 21(3), 535–566. https://doi.org/10.1108/JAOC-05-2024-0156

Ong, T. S., Kasbun, N. F. B., Teh, B. H., Muhammad, H., & Javeed, S. A. (2021). Carbon accounting system: the bridge between carbon governance and carbon performance in Malaysian Companies. Ecosystem Health and Sustainability, 7(1), 1–14. https://doi.org/10.1080/20964129.2021.1927851

Papafloratos, T., & Pantazi, T. (2025). A Systematic Review of the Effects of Mandatory Corporate Sustainability Reporting. Sustainability (Switzerland), 17(12), 1–20. https://doi.org/10.3390/su17125336

Putri, A. A., & Paramita, V. S. (2025). The Effect of ESG Disclosure, Green Investment, and Carbon Emission Disclosure on the Value of Energy Companies in Indonesia: Analysis for the 2019-2023 Period. Sinergi International Journal of Accounting and Taxation, 3(1), 16–33. https://doi.org/10.61194/ijat.v3i1.406

Putri, A. W., & Purnama, I. A. (2026). The impact of carbon emission disclosure , ESG , and gender diversity on financial performance in oil and gas industry. 4(2023), 212–225.

Rahmawati, A., Tsamrotussaadah, I., Salsabila, Z., & Maulana, A. (2021). Peran Akuntansi Karbon Pada Perusahaan. Jrak, 17, 77–89.

Sari, P. A., Ismail, T., Yulianto, A. S., & Muchlish, M. (2025). A Resource-Based View on Low-Carbon Value: Governance and Environmental Management Accounting Pathways via Carbon Disclosure and Stakeholder Pressure. International Journal of Energy Economics and Policy, 15(6), 295–305. https://doi.org/10.32479/ijeep.20596.This

Satria, M. R. (2026). Determinants of Carbon Emission Disclosure Among Indonesian SOEs: Empirical Evidence from Firm Size and Leverage Dynamics (2021-2024). Owner: Riset & Jurnal Akuntansi, 10(1), 429–449. https://doi.org/10.33395/owner.v10i1.2941

Sharaf-Addin, H. H. H. (2024). Carbon Management Accounting System and Corporate Environmental Performance: A Conceptual Framework. International Journal of Energy Economics and Policy, 14(2), 304–310. https://doi.org/10.32479/ijeep.15595

Tarigan, J., Joviaal, D. N., & Valentine, A. (2024). The Effect of Corporate Social Responsibility on Firm Value During COVID-19. Indonesian Journal of Sustainability Accounting and Management, 8(1), 2130–2146. https://doi.org/10.28992/ijsam.v8i1.767

Vaicondam, Y., Mustafa, A. M. A. A., Roslan, S. N. M., Ming, K. L. Y., & Ramayah, M. (2025). GHG and Carbon Emission Intensity: Examining Their Impact on Financial Performance. International Journal of Energy Economics and Policy, 15(1), 190–196. https://doi.org/10.32479/ijeep.17474

Wahyuningrum, I. F. S., Agustina, L., Ihlashul’amal, M., Jati, K. W., Sularsih, S., Anwar, S., & Sriningsih, S. (2025). Carbon Emission Disclosure and Its Impact on Developing Countries. Jurnal Ilmu Lingkungan, 23(2), 472–486. https://doi.org/10.14710/jil.23.2.472-486