Has mandatory reporting improved environmental disclosure quality in Indonesia?

Indah Fajarini Sri Wahyuningrum, Sriningsih,, Annisa Sila Puspita, Mochamad Arief Budihardjo, Amin Chegenizadeh and Hamid Nikraz

World Development Perspectives, 2025, vol. 39, issue C

Abstract: This paper investigates the evolution of environmental disclosure practices among publicly listed Indonesian companies as they transitioned from voluntary to mandatory sustainability reporting between 2016 and 2022. Using a sample of 767 sustainability reports, the study employed a quantitative content analysis and a weighted scoring system ranging from zero to five, aligned with the Global Reporting Initiative (GRI) G4 and GRI Standards. This approach enabled an evaluation of the frequency and quality of environmental information disclosed over time. The findings indicate a substantial increase in reporting volume, with sustainability report submissions rising to 69 % between 2020 and 2021. However, this growth did not correspond to improvements in disclosure quality; in fact, the average environmental disclosure score declined by over 40 % during the same period. Supplier environmental assessments were often significantly underreported, while energy use and effluent management were the most frequently disclosed topics. Environmentally sensitive sectors, particularly energy, provided higher quality disclosures (average scores > 0.30), whereas the finance sector produced the most reports but with the lowest average quality (< 0.15). These findings highlight a trend of nominal compliance, suggesting that many companies prioritize regulatory adherence over substantive transparency. This study contributes a longitudinal empirical perspective from a developing context and calls for stronger, sector-specific regulatory enforcement.

Keywords: Environmental disclosure; Sustainability reporting; Content analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wodepe:v:39:y:2025:i:c:s2452292925000633

DOI: 10.1016/j.wdp.2025.100718

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