Ayu Oktaviani, Muhammad Atho Al Ghozi

CARBON EMISSION DISCLOSURE, ECO-EFFICIENCY, AND FIRM VALUE

Introduction

Carbon emission disclosure, eco-efficiency, and firm value. Investigate carbon emission disclosure & eco-efficiency's impact on firm value in Indonesia's energy sector (2019-2023). Eco-efficiency boosts value, but disclosure has no significant effect.

Abstract

Environmental problems such as global warming that are currently occurring have prompted a shift in business focus that was once profit-oriented, towards a broader orientation by considering environmental aspects as one of the aspects that stakeholders need to pay attention to in making decisions. This study aims to prove that environmental aspects, especially carbon emission disclosure and eco-efficiency practices, can build better firm value. With the population of energy sector companies listed on the Indonesia Stock Exchange in 2019-2023 and multiple linear regression analysis methods, it was found that carbon emission disclosure did not significantly impact the firm value. It shows that the comprehensiveness of carbon emission disclosure has not been a strong signal in changing investors' perception of companies. Inversely proportional to the results of other tests, eco-efficiency, which has a positive and significant influence on the firm value, shows that the company's ability to balance ecological and economic aspects brings a positive and significant signal to the assessment of stakeholders towards a company. The study contributes to the theory and practice of green accounting, namely the disclosure of carbon emissions and eco-efficiency to stakeholders' perception, especially investors in their business decisions.

Review

This study delves into a highly pertinent contemporary issue: the integration of environmental considerations, specifically carbon emission disclosure and eco-efficiency, into the assessment of firm value. Addressing the global shift from purely profit-driven business models towards a broader stakeholder-oriented approach that incorporates environmental aspects, the research aims to empirically demonstrate how these green accounting practices can contribute to building better firm value. The chosen context of energy sector companies on the Indonesia Stock Exchange provides a valuable lens through which to examine these relationships in an emerging market setting. The methodology employed multiple linear regression analysis on data from energy sector companies listed on the Indonesia Stock Exchange between 2019 and 2023. The findings reveal a contrasting impact of the two environmental variables. Notably, carbon emission disclosure was found to have no significant impact on firm value, leading the authors to conclude that the comprehensiveness of such disclosures has not yet become a strong signal to alter investors' perceptions. Conversely, eco-efficiency demonstrated a positive and significant influence on firm value, indicating that companies adept at balancing ecological responsibility with economic performance are indeed recognized positively by stakeholders, translating into enhanced firm valuation. The study contributes to the theory and practice of green accounting by shedding light on how different facets of environmental performance are perceived by stakeholders, particularly investors. While the significant finding for eco-efficiency offers a clear strategic imperative for companies, the non-significant result for carbon emission disclosure raises important questions regarding the maturity of disclosure practices, the quality of reported information, or the market's current capacity to fully interpret and price such environmental data in contexts like Indonesia. This research thus provides valuable insights for both academics exploring the nexus between sustainability and finance, and practitioners aiming to strategically leverage environmental performance for enhanced corporate value.

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