Financial implications of environmental issues for fish farming in Malta

Abstract

Purpose: The purpose of this study is to investigate how environmental regulations financially affect fish farm companies in Malta, and to identify how these costs are reported by these companies. Design: The research methodology of this study used a qualitative approach, to obtain detailed information from the case company and other governmental authorities. Findings: The fish farming industry is heavily regulated and the main body responsible for environmental regulations falls under the Environment and Resources Authority, which issues an annual environmental permit to fish farm companies including the conditions that must be followed. The case company struggles to follow all the regulations concurrently, resulting in negative repercussions as the company does not prioritize the regulations and the environment. The case company views environmental costs as insignificant, whilst the authorities believe otherwise. However, there seems to be a lack of ability to identify these costs and to classify them. This is then reflected in a deficit in their accounting and reporting. Environmental Management Accounting uses accountancy techniques to identify, analyse and manage environmental costs that would benefit both the company and the environment. Unfortunately, the case company does not carry out Environmental Management Accounting or Corporate Social Responsibility. In fact, a limitation of this study was the fact that the case company officers believed that Environmental Management Accounting is insignificant in real life.