The Impact of Environmental Performance on Environmental Disclosure and Detailed Environmental Reporting in Companies
DOI:
https://doi.org/10.69725/aneva.v1i1.105
Keywords:
Environmental Performance, Environmental Disclosure, Hard Environmental Disclosure, Company Size, ProfitabilityAbstract
Objective: This study aims to explore the impact of Environmental Performance on Environmental Disclosure and Hard Environmental Disclosure among companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2023. It also examines the influence of company size, leverage, and profitability on these disclosure practices.
Methods: A mixed-methods approach is employed, combining quantitative data from annual and sustainability reports with PROPER ratings. The analysis utilizes multiple regression to assess the relationships between Environmental Performance, Environmental Disclosure, and Hard Environmental Disclosure, with classical assumption tests conducted to ensure the validity of the regression model.
Results: The analysis reveals that higher Environmental Performance is positively associated with increased Environmental Disclosure. Additionally, more comprehensive Environmental Disclosure correlates with more detailed Hard Environmental Disclosure. Among the control variables, Company Size and Profitability significantly affect both Environmental Disclosure and Hard Environmental Disclosure, while Leverage does not show a significant impact.
Novelty: This study advances the understanding of how Environmental Performance influences disclosure practices in Indonesian firms and highlights the role of company-specific factors such as size and profitability in shaping the extent and detail of environmental reporting.
Implication: The findings suggest that improving Environmental Performance can lead to more extensive and detailed Environmental Disclosure. For policymakers and practitioners, this underscores the need for strategies and regulations that promote transparent environmental reporting, particularly considering the varying impacts of company size and profitability.
Downloads
References
Acar, Merve, and Hüseyin Temiz. 2020. “Empirical Analysis on Corporate Environmental Performance and Environmental Disclosure in an Emerging Market Context.” International Journal of Emerging Markets 15(6):1061–82. doi: 10.1108/IJOEM-04-2019-0255.
Aigbedo, Henry. 2019. “Assessment of the Effect of Location and Financial Variables on Environmental Management Performance for Industrial Goods Supply Chains.” Journal of Environmental Management 236:254–68. doi: https://doi.org/10.1016/j.jenvman.2018.11.066.
Arena, M., G. Azzone, and F. Mapelli. 2018. “What Drives the Evolution of Corporate Social Responsibility Strategies? An Institutional Logics Perspective.” Journal of Cleaner Production 171:345–55. doi: https://doi.org/10.1016/j.jclepro.2017.09.245.
Baah, Charles, Zhihong Jin, and Liang Tang. 2020. “Organizational and Regulatory Stakeholder Pressures Friends or Foes to Green Logistics Practices and Financial Performance: Investigating Corporate Reputation as a Missing Link.” Journal of Cleaner Production 247:119125. doi: https://doi.org/10.1016/j.jclepro.2019.119125.
Baah, Charles, Douglas Opoku-Agyeman, Innocent Senyo Kwasi Acquah, Yaw Agyabeng-Mensah, Ebenezer Afum, Daniel Faibil, and Farid Abdel Moro Abdoulaye. 2021. “Examining the Correlations between Stakeholder Pressures, Green Production Practices, Firm Reputation, Environmental and Financial Performance: Evidence from Manufacturing SMEs.” Sustainable Production and Consumption 27:100–114. doi: https://doi.org/10.1016/j.spc.2020.10.015.
Baalouch, Fatma, Salma Damak Ayadi, and Khaled Hussainey. 2019. “A Study of the Determinants of Environmental Disclosure Quality: Evidence from French Listed Companies.” Journal of Management and Governance 23(4):939–71. doi: 10.1007/s10997-019-09474-0.
Baboukardos, Diogenis. 2018. “The Valuation Relevance of Environmental Performance Revisited: The Moderating Role of Environmental Provisions.” The British Accounting Review 50(1):32–47. doi: https://doi.org/10.1016/j.bar.2017.09.002.
Baboukardos, Diogenis, and Gunnar Rimmel. 2016. “Value Relevance of Accounting Information under an Integrated Reporting Approach: A Research Note.” Journal of Accounting and Public Policy 35(4):437–52. doi: https://doi.org/10.1016/j.jaccpubpol.2016.04.004.
Beske, Felix, Ellen Haustein, and Peter C. Lorson. 2020. “Materiality Analysis in Sustainability and Integrated Reports.” Sustainability Accounting, Management and Policy Journal 11(1):162–86. doi: 10.1108/SAMPJ-12-2018-0343.
Chen, Shuanglian, Yan Wang, Khaldoon Albitar, and Zhehao Huang. 2021. “Does Ownership Concentration Affect Corporate Environmental Responsibility Engagement? The Mediating Role of Corporate Leverage.” Borsa Istanbul Review 21:S13–24. doi: https://doi.org/10.1016/j.bir.2021.02.001.
Choudhary, Preeti, Kenneth Merkley, and Katherine Schipper. 2021. “Immaterial Error Corrections and Financial Reporting Reliability.” Contemporary Accounting Research 38(4):2423–60. doi: https://doi.org/10.1111/1911-3846.12713.
Clarkson, Peter M., Yue Li, Gordon D. Richardson, and Florin P. Vasvari. 2008. “Revisiting the Relation between Environmental Performance and Environmental Disclosure: An Empirical Analysis.” Accounting, Organizations and Society 33(4):303–27. doi: https://doi.org/10.1016/j.aos.2007.05.003.
Cooksey, Ray W. 2020. “Descriptive Statistics for Summarising Data BT - Illustrating Statistical Procedures: Finding Meaning in Quantitative Data.” Pp. 61–139 in, edited by R. W. Cooksey. Singapore: Springer Singapore.
Cordeiro, James J., Giorgia Profumo, and Ilaria Tutore. 2021. “Family Ownership and Stockholder Reactions to Environmental Performance Disclosure: A Test of Secondary Agency Relationships.” Business Strategy and the Environment 30(4):2091–2107. doi: https://doi.org/10.1002/bse.2734.
Destek, Mehmet Akif. 2021. “Deindustrialization, Reindustrialization and Environmental Degradation: Evidence from Ecological Footprint of Turkey.” Journal of Cleaner Production 296:126612. doi: https://doi.org/10.1016/j.jclepro.2021.126612.
Dragomir, Voicu D. 2018. “How Do We Measure Corporate Environmental Performance? A Critical Review.” Journal of Cleaner Production 196:1124–57. doi: https://doi.org/10.1016/j.jclepro.2018.06.014.
Egelston, Anne. 2022. “The Earth Summit and Its Aftermath BT - Worth Saving: International Diplomacy to Protect the Environment.” Pp. 105–21 in, edited by A. Egelston. Cham: Springer International Publishing.
Epstein, Martin Freedman. 1994. “Epstein Dan Friedman (1994).” Accounting, Auditing & Accountability Journal.
Fernandez, Maria E., Timothy J. Walker, Bryan J. Weiner, William A. Calo, Shuting Liang, Betsy Risendal, Daniela B. Friedman, Shin Ping Tu, Rebecca S. Williams, Sara Jacobs, Alison K. Herrmann, and Michelle C. Kegler. 2018. “Developing Measures to Assess Constructs from the Inner Setting Domain of the Consolidated Framework for Implementation Research.” Implementation Science 13(1):52. doi: 10.1186/s13012-018-0736-7.
Freeman, R. Edward, and L. Reed David. 1983. “Stockholders and Stakeholders: A New Perspective on Corporate Governance.” California Management Review 25(3):88–106. doi: 10.2307/41165018.
Gerged, Ali Meftah, Eshani Beddewela, and Christopher J. Cowton. 2021. “Is Corporate Environmental Disclosure Associated with Firm Value? A Multicountry Study of Gulf Cooperation Council Firms.” Business Strategy and the Environment 30(1):185–203. doi: https://doi.org/10.1002/bse.2616.
Gunawan, Juniati, Paulina Permatasari, and Hasan Fauzi. 2022. “The Evolution of Sustainability Reporting Practices in Indonesia.” Journal of Cleaner Production 358:131798. doi: https://doi.org/10.1016/j.jclepro.2022.131798.
Hoang, Thi Hong Van, Linh Pham, and Thanh Thi Phuong Nguyen. 2023. “Does Country Sustainability Improve Firm ESG Reporting Transparency? The Moderating Role of Firm Industry and CSR Engagement.” Economic Modelling 125:106351. doi: https://doi.org/10.1016/j.econmod.2023.106351.
Jiang, Li, Lawrence Jun Zhang, and Stephen May. 2019. “Implementing English-Medium Instruction (EMI) in China: Teachers’ Practices and Perceptions, and Students’ Learning Motivation and Needs*.” International Journal of Bilingual Education and Bilingualism 22(2):107–19. doi: 10.1080/13670050.2016.1231166.
Kannenberg, Linda, and Philipp Schreck. 2019. “Integrated Reporting: Boon or Bane? A Review of Empirical Research on Its Determinants and Implications.” Journal of Business Economics 89(5):515–67. doi: 10.1007/s11573-018-0922-8.
Karaman, Abdullah S., Merve Kilic, and Ali Uyar. 2020. “Green Logistics Performance and Sustainability Reporting Practices of the Logistics Sector: The Moderating Effect of Corporate Governance.” Journal of Cleaner Production 258:120718. doi: https://doi.org/10.1016/j.jclepro.2020.120718.
Khan, M. L. 2011. “Economic Thought Of Muhammad Baqir Al-Sadr: A Study Of Iqtisaduna (Our Economics).” Masters Diss., University of Kashmir 1–157.
Kılıç, Merve, and Cemil Kuzey. 2018. “Assessing Current Company Reports According to the IIRC Integrated Reporting Framework.” Meditari Accountancy Research 26(2):305–33. doi: 10.1108/MEDAR-04-2017-0138.
Knief, Ulrich, and Wolfgang Forstmeier. 2021. “Violating the Normality Assumption May Be the Lesser of Two Evils.” Behavior Research Methods 53(6):2576–90. doi: 10.3758/s13428-021-01587-5.
Kordsachia, Othar, Maximilian Focke, and Patrick Velte. 2022. “Do Sustainable Institutional Investors Contribute to Firms’ Environmental Performance? Empirical Evidence from Europe.” Review of Managerial Science 16(5):1409–36. doi: 10.1007/s11846-021-00484-7.
Lashitew, Addisu A. 2021. “Corporate Uptake of the Sustainable Development Goals: Mere Greenwashing or an Advent of Institutional Change?” Journal of International Business Policy 4(1):184–200. doi: 10.1057/s42214-020-00092-4.
Latan, Hengky, Charbel Jose Chiappetta Jabbour, and Ana Beatriz Lopes de Sousa Jabbour. 2019. “Ethical Awareness, Ethical Judgment and Whistleblowing: A Moderated Mediation Analysis.” Journal of Business Ethics 155(1):289–304. doi: 10.1007/s10551-017-3534-2.
Latan, Hengky, Charbel Jose Chiappetta Jabbour, Ana Beatriz Lopes de Sousa Jabbour, Samuel Fosso Wamba, and Muhammad Shahbaz. 2018. “Effects of Environmental Strategy, Environmental Uncertainty and Top Management’s Commitment on Corporate Environmental Performance: The Role of Environmental Management Accounting.” Journal of Cleaner Production 180:297–306. doi: 10.1016/j.jclepro.2018.01.106.
Li, Dayuan, Min Huang, Shenggang Ren, Xiaohong Chen, and Lutao Ning. 2018. “Environmental Legitimacy, Green Innovation, and Corporate Carbon Disclosure: Evidence from CDP China 100.” Journal of Business Ethics 150(4):1089–1104. doi: 10.1007/s10551-016-3187-6.
Lo-Iacono-Ferreira, Vanesa G., Salvador F. Capuz-Rizo, and Juan Ignacio Torregrosa-López. 2018. “Key Performance Indicators to Optimize the Environmental Performance of Higher Education Institutions with Environmental Management System – A Case Study of Universitat Politècnica de València.” Journal of Cleaner Production 178:846–65. doi: https://doi.org/10.1016/j.jclepro.2017.12.184.
Lu, Jing, and Jun Wang. 2021. “Corporate Governance, Law, Culture, Environmental Performance and CSR Disclosure: A Global Perspective.” Journal of International Financial Markets, Institutions and Money 70:101264. doi: 10.1016/j.intfin.2020.101264.
Nguyen, Tuyet T. A., Chi T. Tran, Thuy B. Ly, and Thanh T. N. Nguyen. 2023. “Developing a Provincial Environmental Performance Index for the Environmental Health of Vietnam.” Environment, Development and Sustainability 25(1):622–47. doi: 10.1007/s10668-021-02072-x.
Pedron, Angela Patrícia Bovolini, Clea Beatriz Macagnan, Davi Souza Simon, and Daniel Francisco Vancin. 2021. “Environmental Disclosure Effects on Returns and Market Value.” Environment, Development and Sustainability 23(3):4614–33. doi: 10.1007/s10668-020-00790-2.
Pitrakkos, Panayis, and Warren Maroun. 2020. “Evaluating the Quality of Carbon Disclosures.” Sustainability Accounting, Management and Policy Journal 11(3):553–89. doi: 10.1108/SAMPJ-03-2018-0081.
Qian, Wei, Jacob Hörisch, and Stefan Schaltegger. 2018. “Environmental Management Accounting and Its Effects on Carbon Management and Disclosure Quality.” Journal of Cleaner Production 174:1608–19. doi: https://doi.org/10.1016/j.jclepro.2017.11.092.
Qin, Yan, Julie Harrison, and Li Chen. 2019. “A Framework for the Practice of Corporate Environmental Responsibility in China.” Journal of Cleaner Production 235:426–52. doi: https://doi.org/10.1016/j.jclepro.2019.06.245.
Rabaya, Abdullah Jihad, and Norman Mohd Saleh. 2022. “The Moderating Effect of IR Framework Adoption on the Relationship between Environmental, Social, and Governance (ESG) Disclosure and a Firm’s Competitive Advantage.” Environment, Development and Sustainability 24(2):2037–55. doi: 10.1007/s10668-021-01519-5.
Robins, James, and Margarethe F. Wiersema. 1995. “A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance.” Strategic Management Journal 16(4):277–99. doi: https://doi.org/10.1002/smj.4250160403.
Saini, Neha, Monica Singhania, Morshadul Hasan, Miklesh Prasad Yadav, and Mohammad Zoynul Abedin. 2022. “Non-Financial Disclosures and Sustainable Development: A Scientometric Analysis.” Journal of Cleaner Production 381:135173. doi: https://doi.org/10.1016/j.jclepro.2022.135173.
Sarstedt, Marko, and Erik Mooi. 2019. “Regression Analysis BT - A Concise Guide to Market Research: The Process, Data, and Methods Using IBM SPSS Statistics.” Pp. 209–56 in, edited by M. Sarstedt and E. Mooi. Berlin, Heidelberg: Springer Berlin Heidelberg.
Schmidt, Amand F., and Chris Finan. 2018. “Linear Regression and the Normality Assumption.” Journal of Clinical Epidemiology 98:146–51. doi: https://doi.org/10.1016/j.jclinepi.2017.12.006.
Shahab, Yasir, and Chengang Ye. 2018. “Corporate Social Responsibility Disclosure and Corporate Governance: Empirical Insights on Neo-Institutional Framework from China.” International Journal of Disclosure and Governance 15(2):87–103. doi: 10.1057/s41310-018-0038-y.
Shen, Feng, Yunwen Ma, Run Wang, Ningning Pan, and Zhiyi Meng. 2019. “Does Environmental Performance Affect Financial Performance? Evidence from Chinese Listed Companies in Heavily Polluting Industries.” Quality & Quantity 53(4):1941–58. doi: 10.1007/s11135-019-00849-x.
Simsekler, Mecit Can Emre, James R. Ward, and P. John Clarkson. 2018. “Evaluation of System Mapping Approaches in Identifying Patient Safety Risks.” International Journal for Quality in Health Care 30(3):227–33. doi: 10.1093/intqhc/mzx176.
Soytas, Mehmet Ali, Meltem Denizel, and Damla Durak Usar. 2019. “Addressing Endogeneity in the Causal Relationship between Sustainability and Financial Performance.” International Journal of Production Economics 210:56–71. doi: https://doi.org/10.1016/j.ijpe.2019.01.016.
Tang, Zhi, and Jintong Tang. 2018. “Stakeholder Corporate Social Responsibility Orientation Congruence, Entrepreneurial Orientation and Environmental Performance of Chinese Small and Medium-Sized Enterprises.” British Journal of Management 29(4):634–51. doi: https://doi.org/10.1111/1467-8551.12255.
Terlaak, Ann, Seonghoon Kim, and Taewoo Roh. 2018. “Not Good, Not Bad: The Effect of Family Control on Environmental Performance Disclosure by Business Group Firms.” Journal of Business Ethics 153(4):977–96. doi: 10.1007/s10551-018-3911-5.
Wang, Shanyong, Hualong Wang, Jing Wang, and Feng Yang. 2020. “Science of the Total Environment Does Environmental Information Disclosure Contribute to Improve Fi Rm Fi Nancial Performance ? An Examination of the Underlying Mechanism.” Science of the Total Environment 714(96):136855. doi: 10.1016/j.scitotenv.2020.136855.
Watson, Rosina, Hugh N. Wilson, Palie Smart, and Emma K. Macdonald. 2018. “Harnessing Difference: A Capability-Based Framework for Stakeholder Engagement in Environmental Innovation.” Journal of Product Innovation Management 35(2):254–79. doi: https://doi.org/10.1111/jpim.12394.
Wei, Fang, Jawad Abbas, Ghadah Alarifi, Zuoqian Zhang, Nawal Abdalla Adam, and Mauricio Juca de Queiroz. 2023. “Role of Green Intellectual Capital and Top Management Commitment in Organizational Environmental Performance and Reputation: Moderating Role of pro-Environmental Behavior.” Journal of Cleaner Production 405:136847. doi: https://doi.org/10.1016/j.jclepro.2023.136847.
Zhang, T., X. P. Zhou, and X. F. Liu. 2020. “Reliability Analysis of Slopes Using the Improved Stochastic Response Surface Methods with Multicollinearity.” Engineering Geology 271:105617. doi: https://doi.org/10.1016/j.enggeo.2020.105617.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Adhia Arbin, Rillita Rohmatika (Author)

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Creative Commons Attribution-ShareAlike 4.0 International License