Carbon Accounting Practices and Financial Performance of Listed Oil and Gas Companies in Nigeria

The growing emphasis on environmental sustainability and climate change mitigation has heightened the need for firms to adopt effective carbon accounting practices. This study examined the effect of carbon accounting practices on the financial performance of listed oil and gas companies in Nigeria. Specifically, it investigated the influence of emission intensity, carbon reduction initiatives, and carbon cost accounting on financial performance measured by Return on Assets (ROA). An ex post facto research design was adopted using secondary data obtained from the annual and sustainability reports of five purposively selected oil and gas companies from the seven firms listed on the Nigerian Exchange Group (NGX) over the period 2014–2025. Data were analysed using descriptive statistics, correlation analysis, and panel regression techniques, with firm size included as a control variable. The findings revealed that emission intensity negatively affected financial performance (β = −0.254, p = 0.034), whereas carbon reduction initiatives exerted a positive and significant effect (β = 2.271, p = 0.013). Carbon cost accounting exhibited a negative but statistically insignificant effect (β = −0.020, p = 0.098), while firm size had a positive but insignificant relationship with ROA. The model explained 41.7% of the variation in financial performance (R² = 0.417). The study concludes that improving carbon efficiency and investing in carbon reduction initiatives can enhance corporate profitability, whereas carbon-related expenditures alone are insufficient to influence financial performance. These findings extend the carbon accounting literature within emerging economies and provide empirical support for the Resource-Based View theory by demonstrating that proactive carbon management can serve as a strategic capability for achieving sustainable financial performance.

Carbon Accounting, Emission Intensity, Carbon Reduction Initiatives, Carbon Cost Accounting, Financial Performance, Return on Assets, Oil and Gas Companies, Nigeria.

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