Environmental Performance and Carbon Emission Disclosures: A case of Indonesian Manufacturing Companies

Abstract

Having population more than 250 million, Indonesia is among countries with high carbon emissions. As industry sector of this country contributes significantly to carbon emissions, the Ministry of Environment and Forestry of Indonesia requires companies to implement PROPER—a program to control negative impacts of companies’ operations on environment. The objective of study is to identify the impacts of PROPER on carbon emission disclosure. Environmental performance measured by PROPER has five levels i.e. black, red, blue, green, and gold. Black is considered the lowest rating with score 1 and gold is the best performance with score of 5. The study employs 18 indicators suggested by Carbon Disclosure Project (CDP) to measure carbon emission disclosure. These indicatorsare classified into five categories i.e.climatechange, green housegas, energyconsumption, reduction and cost, and accountability of emission carbon. By using purposive sampling, this study collects data from 100 manufacturing companies listed on IDX. On average manufacturing companies earn blue rating with carbon emission disclosure reach the percentage of 21%. PROPER rating positively and significantly affectseach category of carbon emission disclosure. The government and related parties need to facilitate these companies to improve their environmental performance and carbon emission disclosure.