Driving sustainability with Industry 4.0: the role of accounting and risk management
Nha Minh Nguyen, Duong Van Bui, Hien Vo Van, Dao Thi Truc VoPurpose
This study aims to examine the direct and indirect impacts of Industry 4.0 in accounting (INAC), sustainability accounting and enterprise risk management (ERM) on sustainability performance in the context of G7 countries. In this study, sustainability accounting and ERM are examined as mediator variables for INAC–sustainability performance nexus.
Design/methodology/approach
Starting with a LSEG database of 20,726 G7 companies, stringent selection criteria was applied, resulting in a final sample of 982 firms spanning 2019–2023 (yielding 4,910 firm-year observations). The maximum likelihood structural equation modeling was used to examine direct and indirect effects and achieve optimal model fit.
Findings
The finding of this study indicates that INAC has a favorable effect on both sustainability accounting and ERM in the G7 context. The sustainability accounting also has a favorable impact on sustainability performance, but ERM negatively influences sustainability performance. The sustainability accounting exhibits an additional mediating role for INAC–sustainability performance nexus; however, ERM plays a competitive mediating role for the link.
Practical implications
This paper implies practical guidance for G7 enterprises seeking to enhance sustainability performance. The results of this study highlight the significance of robust sustainability accounting activities for improved performance. However, the negative relationship between ERM and sustainability performance suggests a need for firms to critically evaluate and refine their risk management strategies, ensuring they align with sustainability goals. The mediating roles of sustainability accounting and ERM further emphasize the need for integrated approaches to leverage Industry 4.0 for sustainable outcomes.
Originality/value
This study puts up a comprehensive examination of the interplay among INAC, sustainability accounting, ERM and sustainability performance within the G7 context, a relationship largely unexplored in prior research. Moreover, this study clarifies the mediating roles of both sustainability accounting and ERM in INAC–sustainability performance link, offering nuanced insights into the mechanisms driving these connections. The unexpected negative relationship between ERM and sustainability performance uncovered in this study challenges existing assumptions and opens new avenues for future research exploring this paradoxical finding within developed economies.