Integration matters – The Impact of Environmental Management Control Systems on Environmental and Financial Performance

Should environmental and financial management control systems be integrated? The answer is a clear yes. More effective environmental management control systems (EMCS) also leads to improved environmental performance. The findings of the empirical study by Valeria Knels, Prof. Edeltraud Günther, and Thomas Günther show that integrated EMCS is associated with improvements in both environmental and financial performance. However, the effect depends on the type of integration. Management integration strengthens the already positive relationship between EMCS and environmental performance. EMCS does not, however, automatically lead to improved financial performance. This is only the case when environmental and financial MCS are also integrated at the technical level. The study explains why some prior empirical studies do not find an effect of EMCS on financial performance because integration matters.

What is management integration, and what is technical integration?
Management integration exists when environmental and financial controllers share common skills, receive joint training, consider environmental and financial impacts together, and work collaboratively in meetings to identify the best solution. Technical integration, by contrast, involves the joint collection of environmentally and financially relevant information, the shared use of ERP systems, or the collection and reporting of environmental data through integrated information and controlling systems.

The study is based on a survey of both environmental managers and controllers at 112 large German companies. The data were analyzed using partial least squares structural equation modeling (PLS-SEM).

Knels, V./Guenther, E./Guenther, T.W. (2026): Integration Matters: The Relationships between Environmental Management Control Systems and Environmental and Financial Performance, Journal of Accounting and Organizational Change, 22(7), 66-90.

Link to the study: https://doi.org/10.1108/JAOC-02-2025-0054