Role of Green Audit in Improving Financial Performance and Sustainability Sharia Cooperatives in the Green Economy Era

Abstract

The study aims at examining the impact of Green Audit on the financial performance of Islamic cooperatives in East Java and its sustainability contributions, the interaction of financial performance with sustainability, and the role of Green Audit in both areas of financial and long-term sustainability. The relationships among the variables are clarified through the explanatory research design of the study. The population consists of 724 individuals who were selected from 80 Islamic cooperatives in East Java. A total of 258 respondents were randomly chosen based on the Slovin formula. The SEM-PLS approach was employed for data analysis. The findings reveal a substantial positive effect of Green Audit on financial performance. This indicates that environmental audit practices in the Islamic cooperatives lead to better use of resources, reduced costs, and increased responsibility. Green Audit also shows a big impact on sustainability. This shows that following environmental rules, being honest in reporting, and using resources wisely all help cooperatives stay competitive in the long run. Environmental auditing also helps cooperatives keep their good name and gain the trust of both their own members and their business partners. The sustainability aspect is also correlated with the financial performance very closely. Good financial health, represented by high profits and sufficient cash flow, enables the cooperative to carry out the sustainable initiatives all the time without any interruptions. Moreover, the Green audit indirectly contributes to sustainability by improving the financial performance. In other words, the efficient environmental auditing not only directly helps sustainability but also increases its area of influence by the financial outcome improvements.