The effect of company financial performance and company characteristics on Greenhouse Gas (GHG) Emission Disclosure

Indah Fajarini Sri Wahyuningrum,Hadrian Djajadikerta,Ema Suprapti,Hadiyanto Hadiyanto,Maryono Maryono,Budi Warsito Budi Warsito

doi:10.1051/e3sconf/201912510008

Indah Fajarini Sri Wahyuningrum, Hadrian Djajadikerta + Show 4 more

Open Access

https://doi.org/10.1051/e3sconf/201912510008

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Abstract

This study aims to examine the effect of company financial performance (profitability), company characteristics (PROPER rating, firm size, and institutional ownership) on Greenhouse Gas (GHG) emission disclosure using all listed companies in Indonesia Stock Exchange in from 2015 to 2017. The GHG emission disclosure variable is measured using the disclosure index approach. The result indicates that on average, the total number of companies disclose their GHG emission disclosure is increased from 30% in 2015 to 32% in 2017, even though the disclosure of GHG emissions is still relatively low. On average, in this study, companies as a sample are in a “blue” rating of PROPER rating (which have value 3 out of 4). The most disclosed item by companies is external verification with 92% in 3 years. The results point out that profitability, PROPER rating, and institutional ownership positively affect the GHG emission disclosure. However, the firm size was not indicated to affect GHG emission disclosure. This study also gives a contribution to the GHG emission disclosure literature by providing factors that affect companies’ GHG emission disclosure, particularly in Indonesia.

Highlights

IntroductionOne of the contributors to climate change is greenhouse gas that elevates global temperature [1]
1.1 BackgroundClimate change has become major attention to all parties worldwide
Criteria Companies listed in Indonesia Stock Exchange in 2018 Non PROPER Companies (20152017) Companies without institutional ownership Companies that do not disclose complete information Companies used for samples Total sampled used (2015-2017)

Summary

Introduction

One of the contributors to climate change is greenhouse gas that elevates global temperature [1]. The negative impacts of greenhouse gas have attracted various comments on the balance between economic development and environmental protection [2]. Like Japan, England, Canada, the European Union, New Zealand, and South Korea have started to act upon greenhouse gas issues by enforcing new regulations. These countries began mandating the disclosure of environmental performance to be reported by companies in their financial statements. Following those developed countries, Indonesia takes actions to decrease greenhouse gas emissions. Since environmental performance disclosure is still largely voluntary, it is not prioritized by many Indonesia companies

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