Small Recycling Firms Need Simple Accounting Tools to Track Green Costs Effectively

Gloria Florensia Br Surbakti Kamis, Agustus 20, 2026
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FORMOSA NEWS

Small plastic recycling enterprises face financial reporting hurdles that mask their environmental contributions and obscure operational costs. A case study published in July 2026 by researchers Vanesa Gabryella Sakamole, Raykes Hinrich Tuerah, Joseph N. Tangon, Sweetie Marsha Mahaling, and Elstie Joni from Politeknik Negeri Manado highlights the urgent need for simplified green accounting systems tailored for small and medium enterprises (SMEs). The study investigated the operational and financial practices of Manado Recycle Hub in Manado City, Indonesia, demonstrating that while recycling entrepreneurs possess high environmental awareness, the absence of practical accounting frameworks prevents them from separately tracking environmental expenses.

Environmental Accounting Gaps in the Recycling Sector

Plastic recycling SMEs perform critical ecological functions by processing waste that would otherwise pollute landfills, rivers, and marine ecosystems. However, traditional accounting practices frequently obscure the true costs associated with these environmental services. Expenditures such as water for washing plastics, electricity for recycling machinery, personal protective equipment (PPE), and residue waste disposal are typically bundled into general operating expenses.

Without distinct classification of environmental expenditures, business managers cannot evaluate operational efficiency, measure true profitability, or verify environmental performance to external stakeholders and institutions. This financial opacity leaves small recycling operations vulnerable to hidden cost inefficiencies while failing to capture the economic value of their sustainability activities.

Research Methodology and Case Study Insights

The research team conducted an in-depth descriptive case study focusing on Manado Recycle Hub, a micro-scale plastic recycling enterprise operating in Manado City. Data collection involved structured interviews with the business owner, direct field observations, and the verification of operational documents such as purchase receipts and weighing logs.

The researchers performed a gap analysis comparing the firm's current bookkeeping methods against established Green Accounting principles. These principles mandate the systematic identification, measurement, and reporting of four specific environmental cost categories:

  • Prevention costs (such as protective equipment and filtration systems)
  • Detection costs (environmental monitoring and testing)
  • Internal failure costs (waste handling and residue management)
  • External failure costs (remediation of off-site impacts)

Key Findings from Manado Recycle Hub

The study revealed several crucial operational and financial insights regarding micro-scale plastic recycling operations:

  • Production and Waste Volume: Manado Recycle Hub processes approximately 641.9 kilograms of raw plastic waste monthly (including PET, HDPE, LDPE, and PP), yielding around 552 kilograms of cleaned, recyclable plastic. This reflects a 14% waste residue rate that requires dedicated disposal management.
  • Unclassified Environmental Expenditures: The enterprise incurs regular environmental expenses, including wastewater containment (IDR 200,000–500,000 monthly), utility usage for cleaning and machinery, residue waste handling, PPE, and transport. All these expenditures are lumped into general operating costs.
  • High Owner Awareness vs. Knowledge Deficits: The business owner rated the importance of environmental cost reporting at 5 out of 5 and expressed strong willingness to adopt green accounting. However, implementation is blocked by a lack of formal accounting training and the absence of simple templates.
  • Manual Recordkeeping: Financial tracking relies entirely on manual logbooks, receipts, and weighing records, without regular preparation of income statements, balance sheets, or cash flow reports.

Industry Implications and Practical Solutions

The findings indicate that the primary barrier to adopting Green Accounting among small recycling businesses is not owner reluctance, but a lack of accessible tools designed for non-accountants. The study emphasizes that complex corporate accounting frameworks are impractical for SMEs operating with small teams and limited administrative resources.

To bridge this gap, the researchers recommend developing spreadsheet-based accounting templates (using Microsoft Excel or Google Sheets) tailored specifically for recycling firms. These systems should feature automated entries, standard procedures for categorizing utility and waste disposal costs, and simplified reporting formats that track recycling output alongside environmental expenditures. Providing such user-friendly tools can strengthen financial sustainability, improve regulatory compliance, and support green economy initiatives across emerging markets.

Expert Perspective

Addressing the gap between environmental commitment and financial recordkeeping, lead author Raykes Hinrich Tuerah and colleagues from Politeknik Negeri Manado noted in their publication:

"Although the business owner demonstrates strong awareness of the importance of environmental cost accounting, its implementation is constrained by limited accounting knowledge and the absence of a simple recording system."

Author Profile

  • Vanesa Gabryella Sakamole, S.Tr.Ak. – Researcher at Politeknik Negeri Manado, specializing in Green Accounting and SME financial systems.
  • Raykes Hinrich Tuerah, S.E., M.S.A. – Academic researcher and lecturer at Politeknik Negeri Manado, specializing in Accounting Information Systems and MSME financial management.
  • Joseph N. Tangon, S.E., M.Si. – Researcher at Politeknik Negeri Manado, focusing on financial accounting and enterprise management.
  • Sweetie Marsha Mahaling, S.E., M.Sa. – Accounting scholar at Politeknik Negeri Manado, researching cost accounting and environmental management.
  • Elstie Joni, S.E., M.Si. – Researcher at Politeknik Negeri Manado, specializing in applied economics and accounting education.

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