Bayu Tri Cahya, Rika Fitri Habsari, Yunus Harjito, Ratih Paramita Sari, Nor Aishah Mohd Ali

A Holistic View of Corporate Sustainability: From Disclosure to Governance Development

Introduction

A holistic view of corporate sustainability: from disclosure to governance development. Examines corporate sustainability, linking carbon emission disclosure, green accounting, material flow cost accounting, and women on boards to sustainability development in Asia.

Abstract

This study examines the effects of carbon emission disclosure, green accounting, material flow cost accounting, and the presence of women on boards of directors on sustainability development. Sustainability development emphasizes that companies carrying out business do not only focus on economic benefits, but also on benefits for the surrounding environment. This study utilizes secondary data, specifically annual reports and sustainability reports, obtained from the official websites of the relevant companies. The population used consists of companies that received the Asia Sustainability Report Rating award and were listed on the Sharia Securities List during the 2018-2023 period, totaling 66 companies. The sampling technique employs purposive sampling to collect company data that matches the specified criteria. Data analysis employs classical assumption tests and hypothesis testing using multiple regression analysis, aided by the IBM SPSS program. The results showed that carbon emission disclosure and material flow cost accounting had a significant impact on sustainability development. Green accounting and women’s directors are expected to impact sustainable development, but this has not been proven in this study. The lack of effect of green accounting on sustainable development is due to the companies studied not clearly defining the indicators of green accounting in their financial statements. Information related to social and environmental issues has not been fully disclosed. In addition, some of the companies studied tend to appoint few women as directors, which is suspected to be the reason for the unproven influence of women on the board of directors on sustainability development.

Review

This study embarks on a highly relevant exploration of corporate sustainability, aiming for a "holistic view" by integrating diverse factors from disclosure practices to governance. The research judiciously selects a unique population of companies recognized with the Asia Sustainability Report Rating award and listed on the Sharia Securities List, offering a distinct contextual lens. The investigation into carbon emission disclosure, green accounting, material flow cost accounting, and the presence of women on boards as drivers of sustainability development is commendable for its breadth. A significant strength lies in the finding that carbon emission disclosure and material flow cost accounting demonstrably contribute to sustainability development, providing valuable empirical evidence for the efficacy of these specific practices. However, the study faces considerable challenges, particularly concerning its inconclusive findings and their accompanying explanations. The lack of proven impact for green accounting is attributed to companies not clearly defining its indicators in financial statements, and for women directors, to their limited presence. These explanations, while plausible, point to potential methodological limitations rather than definitive absence of effect. For green accounting, it raises questions about how the variable was operationalized and measured if its indicators were unclear, potentially compromising the validity of this specific construct. Similarly, if the representation of women on boards is consistently low across the sample, it limits the variance in the independent variable, making it difficult to detect any true impact. Furthermore, the abstract's general definition of "sustainability development" without specifying its precise measurement (e.g., specific ESG metrics, environmental KPIs) leaves a gap in understanding how the dependent variable was empirically captured. To enhance the robustness and contribution of this work, several recommendations can be made. Future iterations should explicitly detail the operationalization and measurement of all variables, particularly "sustainability development" and "green accounting." For green accounting, alternative proxies or more qualitative content analysis approaches might be necessary to capture its nuanced presence beyond explicitly defined financial statement indicators. Regarding women on boards, exploring more granular measures such as the proportion of women, their roles in key committees, or the overall board independence might yield clearer insights. Expanding the sample beyond award-winning Sharia-compliant companies, or alternatively, leveraging the unique characteristics of this specific sample through a more in-depth qualitative analysis, could further illuminate the contextual factors at play. Despite its current limitations, this study provides an initial, valuable step in understanding the multifaceted drivers of corporate sustainability within a distinct Asian market, laying groundwork for more refined future investigations.

Full Text

Comments

You need to be logged in to post a comment.