Relationship Between Environmental and Social Accounting Practices on Risk Management among Non-Governmental Organizations in Kajiado County, Kenya

Non-Governmental Organizations (NGOs), now legally recognized as Public Benefit Organizations (PBOs) following the operationalization of the Public Benefit Organizations Act, 2013 and the gazettement of the Public Benefit Organizations Regulations, 2026, operate in increasingly complex environments characterized by financial uncertainty, donor dependency, climate-related risks, governance challenges, reputational pressures, and heightened stakeholder expectations. These challenges have intensified the need for robust governance, accountability, and enterprise risk management systems that enhance organizational resilience and long-term sustainability. Globally, the establishment of the International Sustainability Standards Board (ISSB) and the issuance of IFRS S1 and IFRS S2 have repositioned sustainability accounting from a voluntary reporting practice to a strategic framework for identifying, assessing, and communicating sustainability-related risks and opportunities. In Kenya, this agenda is reinforced by Vision 2030, the Bottom-Up Economic Transformation Agenda (BETA), the national roadmap for implementing the IFRS Sustainability Disclosure Standards, and the operationalization of the PBO Act, all of which promote transparency, accountability, prudent resource management, and sustainable organizational governance. Despite these developments, empirical evidence on the relationship between sustainability accounting and risk management within NGOs remains limited. This study examined the relationship between environmental and social sustainability accounting practices and risk management among NGOs in Kajiado County, Kenya. Anchored on Stakeholder Theory and Social Contract Theory, the study adopted a cross-sectional mixed-methods research design. Data were collected from 93 registered NGOs using structured questionnaires and key informant interviews. Quantitative data were analyzed using descriptive statistics, Pearson's correlation, and simple linear regression, while qualitative data were analyzed thematically. Environmental sustainability accounting had a positive and statistically significant relationship with risk management (r = 0.208, p = 0.046) and significantly predicted risk management (β = 0.344, p = 0.046), although its explanatory power was modest (R² = 0.043). Social sustainability accounting demonstrated a stronger positive relationship (r = 0.498, p < 0.001) and significantly predicted risk management (β = 0.491, p < 0.001), explaining 24.8% of the variation (R² = 0.248). Qualitative findings showed that environmental sustainability accounting was largely compliance-driven, whereas social sustainability accounting was more deeply embedded in stakeholder engagement and organizational decision-making, making it more effective in managing operational and reputational risks. The study concludes that both dimensions significantly enhance organizational risk management, although social sustainability accounting exerts a stronger influence. It recommends integrating sustainability accounting into governance, strategic planning, and enterprise risk management frameworks as a strategic management tool rather than merely a reporting or compliance function.

Sustainability Accounting, Environmental Sustainability Accounting

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