Accounting Information for Environmental Protection Expenditure and Sustainability Risk Management: Evidence from EU Member States

This study examines how accounting information on environmental protection expenditure can support fiscal transparency and sustainability risk management in the public sector. Using harmonised Environmental Protection Expenditure Accounts (EPEA) data for EU Member States, together with GDP and population indicators, the paper develops a comparative framework for analysing public-sector environmental expenditure. The study constructs scaled indicators, including expenditure per capita and expenditure as a percentage of GDP, and examines the functional composition of expenditure through the Classification of Environmental Protection Activities and Expenditure (CEPA). Exploratory clustering and panel regression diagnostics are used to identify cross-country expenditure profiles and descriptive associations with macroeconomic indicators. The findings show substantial variation among Member States and confirm that environmental expenditure should not be interpreted as a direct measure of environmental ambition or performance. Instead, differences reflect accounting scope, institutional arrangements, service-delivery models and infrastructure needs. The paper contributes to sustainability accounting, public financial management and sustainable finance by demonstrating how harmonised accounting information can improve comparability, auditability and decision usefulness in public-sector environmental reporting. It also highlights the relevance of environmental expenditure information for identifying fiscal exposure, infrastructure priorities and sustainability-related risks.