ABSTRACT

The emergence of the idea of carbon trading and system of carbon emissions reduction originated from global concerns about climate change and rising global temperatures in the world. Through the Kyoto Protocol, carbon emission reduction concepts have been arranged in such a way through the ratification of the protocol. Consciousness of individual, business, and countries to have a commitment to reduce carbon emissions becomes a key factor. For business entities, carbon cost management becomes a strategic choice to maintain the company in the future through carbon emission efficiency. Companies have a lot benefits by reducing of production cost based on the carbon efficiency of carbon emissions; for example, they have carbon-friendly products and more accepted by consumers. This study describes the extent to which awareness of companies on the idea of the carbon-emissions efficiency through the concepts of carbon cost management, and the extent to which they implemented the concepts. Specifically, the objective of this study is to examine the extent to which the disparity between concept and implementation of Carbon Cost Management. The variables in this study are the concepts of carbon cost management and the practices of carbon cost management. Carbon cost management concepts are concepts or ideas about the efficiently carbon emissions management in order to obtain low-cost emissions. Concepts are referenced from the research and focus group discussions which were conducted by Ratnatunga (2007b, 2010). While, the variables of carbon cost management practices are the concepts about the carbon cost management that is practiced by companies in thier production systems / management accounting system. By using paired sample t-test, the hypotheses was tested. The main conclusions of this study is that there is a disparity between concept and practice of carbon cost management. Concepts and expectations initiated by researchers, professionals and practitioners cannot be implemented fully within the scope of the company. These concepts are classified into two factors, i.e. production factor and controlling factor. Factor of production is the most important factor to consider if the company wants to develop a strategic system of Carbon Cost Management.

Key Word: Carbon Cost Management, Carbon Trading, Climate Change, Carbon Cost Accounting, Carbonomics.