The Effect of Sustainability Accounting and Environmental Performance on Financial Performance (Study of Manufacturing Companies Listed on IDX in 2018-2021)

Abstract

As producers of waste that has great potential to damage the environment, companies must show their responsibility by implementing sustainability accounting through the disclosure of information on economic, environmental, and social dimensions and improving their environmental performance. Both aspects can affect stakeholders’ perceptions of the company which in turn will affect the company’s financial performance. This study aims to determine the effect of sustainability accounting implementation and environmental performance on financial performance. This research uses quantitative methods. Using a purposive sampling technique, the research sample is manufacturing companies listed on the Indonesia Stock Exchange in 2018-2021 (4 years). The data used is secondary data obtained from financial reports and annual reports published by the Indonesia Stock Exchange (www.idx.com) and sustainability reports published through the company’s website. Data analysis and hypothesis testing using multiple linear regression analysis. The results showed that partially, the application of sustainability accounting in the economic dimension has no effect on financial performance, the application of sustainability accounting in the environmental dimension has a negative and significant effect on financial performance, the application of sustainability accounting in the social dimension has a positive and significant effect on financial performance, and environmental performance has a negative and significant effect on financial performance. Simultaneously, the four variables have a positive and significant effect on financial performance.