Investigative Studies on Environmental Disclosure and the Costs of R&D as a Compliance with Government Policy on Corporate Social Responsibility in Indonesia

Abstract

The research objective is to provide empirical evidence on companies’ responsi­bility to achieve sustainable development, not only for Indonesia but for the world. This study investigated the allocation of research and development costs as other government regulations issued related to the environment i.e., in 2004, 2007, and 2012. Samples observations as many as 246 companies in 11 years. This study separately examined the enforcement of laws related to the environ­ment three times (2004, 2007, and 2012). The test results show that the disclo­sure of environmental information by food and beverage companies in Indonesia increased significantly after the legislation was issued. This finding suggests that since the Indonesian government ratified the Kyoto Protocol in 2004, Indonesian companies are more transparent in terms of informing the public about the envi­ronmental conservation activities that they do. The study also found that there is a positive relationship between the allocation of research and development costs associated with the reduction of the com­pany’s carbon emissions during the year of observation. Significant relationships were also found in 2007 when the government issued Law No. 40 of 2007. How­ever, in 2012 we did not find a significant relationship. This study concluded that the legal instruments that require companies to reduce carbon emissions is ur­gently needed in developing countries like Indonesia. This policy will also deter­mine the success of Indonesia in realizing the commitments to reduce carbon emissions.