Development of Carbon Emission Disclosure Indicators in Indonesia and Analysis of Determining Factors

Septiani Fransisca; Bernadette Robiani; Inten Meutia; Yusnaini Yusnaini

doi:10.48161/qaj.v4n3a617

Authors

Septiani Fransisca Department of Development Economic, Faculty of Economy, Universitas Sriwijaya, Palembang, 30128, Indonesia; Department of Accounting, Faculty of Social Humanities, Universitas Bina Darma, Palembang, 30264, Indonesia;
Bernadette Robiani Department of Development Economic, Faculty of Economy, Universitas Sriwijaya, Palembang, 30128, Indonesia;
Inten Meutia Department of Accounting, Faculty of Economy, Universitas Sriwijaya, Palembang, 30128, Indonesia;
Yusnaini Department of Accounting, Faculty of Economy, Universitas Sriwijaya, Palembang, 30128, Indonesia;

DOI:

https://doi.org/10.48161/qaj.v4n3a617

Abstract

The first objective of this research is to develop indicators of carbon emission disclosure in Indonesia, while the second objective is to analyse the determinants of carbon emission disclosure. This research resulted in the development of carbon emission disclosure indicators. The development recommendations were derived from a review of scientific literature. The results of the recommendation are 14 theme indicators as a measure in carbon emissions disclosure and also become dependent variable of this research. Furthermore, this research analyses various determinants that affect carbon emission disclosure. There are four main groups of variables determined in this study, namely financial performance, ownership, committee, and board of directors. The scope of the research is 225 companies sample listed on the Indonesia Stock Exchange. The industry sectors that are the scope of the research are the energy sector, industrial sector, basic material sector, non-cyclical consumer sector, and transportation sector. The method used in this research is a combination of qualitative and quantitative. The development of carbon emission disclosure indicators was examined using qualitative methods through a literature review. While the determinant analysis uses quantitative methods with probability analysis (logistic regression analysis). The results showed that the group of financial performance variables (represented by leverage and market value variables), ownership (represented by International Listing and state ownership variables), committee (represented by environmental committee), and board of directors (represented by Board Diversity) on carbon emission disclosure in Indonesia have significant effects. The development of indicators and the results of this research have supported the Legitimacy theory as a basis that can influence company's carbon emissions disclosure. The novelty of carbon emissions disclosure indicator can be used as a reference for companies and regulators as a basis for complete carbon emissions disclosure.

Downloads

Download data is not yet available.

References

He, R., Luo, L., Shamsuddin, A., & Tang, Q. (2021). Corporate carbon accounting: A literature review of carbon accounting research from the Kyoto Protocol to the Paris Agreement. Accounting & Finance.

Jeswani, H. K., Wehrmeyer, W., & Mulugetta, Y. (2008). How warm is the corporate response to climate change? Evidence from Pakistan and the UK. Business Strategy and the Environment, 17(1), 46–60.

Alrazi, B., de Villiers, C., & Van Staden, C. J. (2016). The environmental disclosures of the electricity generation industry: A global perspective. Accounting Business Research, 46(6), 665–701.

Adhikari, A., & Zhou, H. (2021). Voluntary disclosure and information asymmetry: Do investors in US capital markets care about carbon emission? Sustainability Accounting, Management and Policy Journal, 13(1), 195–220.

Lahyani, F. E. (2022). Corporate board diversity and carbon disclosure: Evidence from France. Accounting Research Journal, 35(6), 721–736.

Marlowe, J., & Clarke, A. (2022). Carbon accounting: A systematic literature review and directions for future research. Green Finance, 4(1), 71–87.

Datt, R., Luo, L., Tang, Q., & Mallik, G. (2018). An international study of determinants of voluntary carbon assurance. Journal of International Accounting Research, 17(3), 1–20.

Elsayih, J., Tang, Q., & Lan, Y. C. (2018). Corporate governance and carbon transparency: Australian experience. Accounting Research Journal, 31(3), 405–422.

Hassan, O. A. G., & Romilly, P. (2018). Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: New insights. Business Strategy and the Environment, 27(7), 893–909.

Hollindale, J., Kent, P., Routledge, J., & Chapple, L. (2017). Women on boards and greenhouse gas emission disclosures. Accounting & Finance, 59(1), 277–308.

Kiliç, M., & Kuzey, C. (2019). The effect of corporate governance on carbon emission disclosures: Evidence from Turkey. International Journal of Climate Change Strategies and Management, 11(1), 35–53.

Luo, L. (2017). The influence of institutional contexts on the relationship between voluntary carbon disclosure and carbon emission performance. Accounting & Finance, 59(2), 1235–1264.

Manita, R., Bruna, M. G., Dang, R., & Houanti, L. (2018). Board gender diversity and ESG disclosure: Evidence from the USA. Journal of Applied Accounting Research, 19(2), 206–224.

Haque, S., Deegan, C., & Inglis, R. (2016). Demand for, and impediments to, the disclosure of information about climate change-related corporate governance practices. Accounting Business Research, 46(6), 620–664.

Ieng Chu, C., Chatterjee, B., & Brown, A. (2013). The current status of greenhouse gas reporting by Chinese companies. Management Audit Journal, 28(2), 114–139.

Tauringana, V., & Chithambo, L. (2015). The effect of DEFRA guidance on greenhouse gas disclosure. British Accounting Review, 47(4), 425–444.

de Aguiar, T. R. S., & Bebbington, J. (2014). Disclosure on climate change: Analysing the UK ETS effects. Accounting Forum, 38(4), 227–240.

Adhikari, A., & Zhou, H. (2021). Voluntary disclosure and information asymmetry: Do investors in US capital markets care about carbon emission? Sustainability Accounting, Management and Policy Journal, 13(1).

Borghei, Z. (2021). Carbon disclosure: A systematic literature review. Accounting & Finance, 61(4), 5255–5280.

Freedman, M., & Jaggi, B. (2005). Global warming, commitment to the Kyoto protocol, and accounting disclosures by the largest global public firms from polluting industries. International Journal of Accounting, 40(3), 215–232.

Haque, S., & Deegan, C. (2010). Corporate climate change-related governance practices and related disclosures: Evidence from Australia. Australian Accounting Review, 20(4), 317–333.

Galbreath, J. (2010). Corporate governance practices that address climate change: An exploratory study. Business Strategy and the Environment, 19(5), 335–350.

Cowan, S., & Deegan, C. (2011). Corporate disclosure reactions to Australia’s first national emission reporting scheme. Accounting & Finance, 51(2), 409–436.

Freedman, M., & Jaggi, B. (2011). Global warming disclosures: Impact of Kyoto protocol across countries. Journal of International Financial Management and Accounting, 22(1), 46–90.

Hrasky, S. (2011). Carbon footprints and legitimation strategies: Symbolism or action? Accounting, Auditing & Accountability Journal, 25(1), 174–198.

Rankin, M., Windsor, C., & Wahyuni, D. (2011). An investigation of voluntary corporate greenhouse gas emissions reporting in a market governance system: Australian evidence. Accounting, Auditing & Accountability Journal, 24(8), 1037–1070.

Choi, B. B., Lee, D., & Psaros, J. (2013). An analysis of Australian company carbon emission disclosures. Pacific Accounting Review, 25(1), 58–79.

Cotter, J., & Najah, M. M. (2012). Institutional investor influence on global climate change disclosure practices. Australian Journal of Management, 37(2), 169–187.

de Aguiar, T. R. S., & Bebbington, J. (2014). Disclosure on climate change: Analysing the UK ETS effects. Accounting Forum, 38(4), 227–240.

Freedman, M., & Park, J. D. (2014). Mandated climate change disclosures by firms participating in the regional greenhouse gas initiative. Social and Environmental Accountability Journal, 34(1), 29–44.

Comyns, B., & Figge, F. (2015). Greenhouse gas reporting quality in the oil and gas industry. Accounting, Auditing & Accountability Journal, 28(3), 403–433.

Yang, H. H., & Farley, A. (2016). Convergence or divergence? Corporate climate-change reporting in China. International Journal of Accounting and Information Management, 24(4).

Liu, Z., Abhayawansa, S., Jubb, C., & Perera, L. (2017). Regulatory impact on voluntary climate change–related reporting by Australian government-owned corporations. Financial Accounting & Management, 33(3), 264–283.

Momin, M. A., Northcott, D., & Hossain, M. (2017). Greenhouse gas disclosures by Chinese power companies: Trends, content and strategies. Journal of Accounting & Organizational Change, 13(3), 331–358.

Datt, R., Prasad, P., Vitale, C., & Prasad, K. (2022). International evidence of changing assurance practices for carbon emissions disclosures. Meditari Accounting Research, 30(6), 1594–1628.

Luo, L., Lan, Y. C., & Tang, Q. (2012). Corporate incentives to disclose carbon information: Evidence from the CDP Global 500 Report. Journal of International Financial Management and Accounting, 23(2), 93–120.

Peters, G. F., & Romi, A. M. (2014). Does the voluntary adoption of corporate governance mechanisms improve environmental risk disclosures? Evidence from greenhouse gas emission accounting. Journal of Business Ethics, 125(4), 637–666.

Eleftheriadis, I. M., & Anagnostopoulou, E. G. (2015). Relationship between corporate climate change disclosures and firm factors. Business Strategy and the Environment, 24(8), 780–789.

Liesen, A., Hoepner, A. G., Patten, D. M., & Figge, F. (2015). Does stakeholder pressure influence corporate GHG emissions reporting? Empirical evidence from Europe. Accounting, Auditing & Accountability Journal, 28(7), 1047–1074.

Stanny, E., & Ely, K. (2008). Corporate environmental disclosures about the effects of climate change. Corporate Social Responsibility and Environmental Management, 15(6), 338–348.

Ott, C., Schiemann, F., & Günther, T. (2017). Disentangling the determinants of the response and the publication decisions: The case of the Carbon Disclosure Project. Journal of Accounting and Public Policy, 36(1), 14–33.

Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. British Accounting Review, 47(4), 409–424.

Tang, Q. (2017). Framework for and the role of carbon accounting in corporate carbon management systems: A holistic approach. Sydney.

Liu, Y. S., Zhou, X., & Yang, J. H. (2017). Corporate carbon emissions and financial performance: Does carbon disclosure mediate the relationship in the UK? SSRN Electronic Journal.

Luo, Z. (2019). Temporal and spatial evolution of nitrous oxide emissions in China: Assessment, strategy and recommendation. Journal of Cleaner Production, 223, 360–367.

Datt, R. R. (2019). The impact of legitimacy threat on the choice of external carbon assurance: Evidence from the US. Accounting Research Journal, 32(2), 181–202.