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INTRODUCTION
MAIN GOAL OF BUSINESS : In today's intense business competition, companies must adopt many
strategies to survive. This is very important because the company's main goal is basically to maximize
the value of the company or the wealth of the company owner. One of the ways companies maximize
business value is by improving their financial performance. Performance finance plays an important
role in management decision making. Financial performance is a measure of the success of an
organization in managing and allocating resources to achieve organizational goals. The information
provided by each company is presented through a sustainability report and includes a description of
their economic, social and ecological activities.
SUSTAINABILITY REPORT : The issue of sustainability and climate change is the basic foundation
of today's world concern. Demands for sustainability and balance both environmental and social also
need to be considered. Climate change has a very broad impact on people's lives. The increase in the
earth's temperature does not only have an impact on the rise in the earth's temperature but also changes
the climate system which affects various aspects of changes in nature and human life. Some examples
of the negative impacts of climate change are crop failure, extreme weather, and increased disease
outbreaks. If the financial performance goes well and is able to meet the environmental and social
performance and make a real contribution to overcoming these various problems, in the future the
company will survive. Moreover, there have been many cases due to company negligence in this aspect.
Information related to company activities related to environmental aspects and this company needs to
be reported in a sustainable report or often called a sustainability report.
In addition, in an effort to preserve the environment, Accounting plays a role through voluntary
disclosure in its financial statements related to environmental costs. This sustainability report is one of
the elements in the Triple Bottom Line, one of which reports social and environmental performance,
not only financial performance.
Sustainability reports are reports on the economic, environmental and social impacts caused by
company activities. In addition to presenting standard financial reports such as profit and loss, balance
sheet and cash flow, companies need to report practices related to social and environmental aspects, for
example the level of carbon emissions.
REGULATION OF SUSTAINABILITY REPORT : Sustainability reporting begins in companies,
especially companies that go public to be able to disclose and become a grateful business. Disclosure
of sustainability reports in most countries, including Indonesia, is still voluntary, meaning that there are
no obligatory regulations, as is the case with the issuance of financial reports.
the concept of a sustainable business is one whose business performance harmonizes with the priority
of Environmental, Social and Governance aspects (ESG aspects) that have been adopted by companies.
The application of sustainable business and ESG are also increasingly encouraged by the Indonesia
Financial Service Authority (OJK) Regulation No. 51/ POJK.03/2017 concerning the Application of
Sustainable Finance that requires financial services institutions, issuers and publicly listed companies
to apply sustainable finance and prepare a Sustainability Report (as attached). Based on POJK No.
51/POJK.03/2017 and the additional provisions of the OJK Letter No S-264 / D.04 / 2020 dated
November 4, 2020, publicly listed companies are required to prepare a Sustainability Report
Based on research conducted by EY Indonesia, the focus of the sustainability report agenda in Indonesia
includes six aspects, namely:
Initiatives at the international level play an important role in supporting the company's sustainable
development. Because of this, Indonesia has joined various practical initiatives such as the Sustainable
Development Goals (SDGs/Sustainable Development) and the United Nations Framework Convention
on Climate Change (UNFCCC)
The GRI is often used as an international framework for creating corporate sustainability reports. The
latest guidelines in the form of GRI G4 have been released since 2013 with the basic principle of
materiality. One of the important features contained in GRI G4 is the company's flexibility to determine
the level of disclosure over time. GRI G4 has now been updated since 2016 and has been in use since
1 July 2018.
The Financial Services Authority (OJK) is working with several institutions to prepare a sustainable
financial roadmap for companies in the country. This financial track record will be a priority for
sustainable loan instruments such as the renewable energy sector, agriculture, manufacturing,
infrastructure, and MSMEs. The main target of a sustainable financial track record is to increase
transparency in financial service institutions that publish corporate sustainability reports.
4. Integrated Reporting
The International Integrated Reporting Council (IIRC) released an international integrated reporting
framework that carries six important aspects, namely finance, manufacturing, human resources (HR),
intellectuals, social relations and nature.
Sustainable Stock Exchanges (SSE) is a working partnership between the UN, UN-supported
organizations, investors, companies, stock exchanges, regulators and governments. The SSE initiative
serves as a stock exchange platform to increase corporate transparency on environmental, social and
corporate governance issues, so that transparency can encourage sustainable investment. The Dow
Jones Sustainability Index (DJSI) is the most well-known global sustainability index. The Indonesia
Stock Exchange (IDX) in collaboration with the Indonesian Biodiversity Foundation (KEHATI) created
a sustainability index called the SRI KEHATI index.
Investors are starting to pay more attention to the non-financial aspects of the company. Even the
development of non-financial aspects is also used as a basis for decision making. The prospect of a loan
will be wide open for companies that are able to present sustainability reports in a transparent manner.
This makes companies more open in providing information about non-financial aspects. The benefits
of this sustainability report can then convince stakeholders consisting of investors, regulators, customers
and other stakeholders. Transparency in sustainability reports is not only to comply with regulations in
force in the country. The benefits of sustainability reports will motivate the company's internal systems
to seek the best business strategy, so that companies with a good track record have the opportunity to
win in market competition.
THE PHENOMENA
The next largest emissions come from forestry and other land use (FOLU) and peat fires. There are
also emissions from waste, agriculture, and industrial process and product use (IPPU) with details
as shown in the graph. Cumulatively, national greenhouse gas emissions in 2019 have increased
significantly compared to 2010, which at that time amounted to only 809.9 million tonnes of CO2e.
Seeing this condition, Indonesia still seems to be facing a big challenge in meeting the Nationally
Determined Contribution (NDC) target, namely the commitment to reduce greenhouse gas
emissions stipulated through the Paris Agreement.
3. PT. Raja Goedang Mas (RGM) has committed a violation or misuse of the implementation of
the transportation, utilization, processing and storage of Hazardous Toxic Materials (B3) type
waste.
As stated in the Law of the Republic of Indonesia Number: 32 of 2009 concerning the protection
and management of the environment, CHAPTER X, rights, obligations and prohibitions, and article
60, part three regarding dumping. Besides that PT. RGM is suspected of not implementing and/or
violating Republic of Indonesia Government Regulation Number 10 of 2014 concerning Hazardous
and Toxic Waste Management and Decree of the Head (KEPKA) of BAPEDAL Number 1 of 1995
concerning procedures and technical requirements for storing and collecting hazardous and toxic
waste materials.
MAIN REFERENCES
1. (Rudyanto and Siregar 2018) The Effect Of Stakeholder Pressure And Corporate Governance On
The Sustainability Report Quality.
2. Qisthi and Fitri, (2020) examines the effect of stakeholder involvement on the disclosure of the
Sustainability Report based on the G4 Global Reporting Initiative (GRI). The results of this study
indicate that the involvement of shareholders has a significant effect on the disclosure of
sustainability reports. Meanwhile, the involvement of employees, the government and the media
has no 34 effect on the disclosure of sustainability reports.
3. (Aulia Indy et al., 2022) examines The Effect of Managerial Ownership and Institutional
Ownership on Sustainability Reporting and Their Impact on Earning Management. The results of
this study indicate that managerial ownership has no effect on sustainability reporting but this
research shows that institutional ownership has an effect on sustainability reporting. Dependent
Variables: Sustainability Report Independent Variables: Managerial Ownership, Institutional
Ownership.
LITERATURE REVIEW
Slide selanjutnya
Hypothesis
(Mnif Sellami et al., 2019)With increasing awareness of sustainability, employees are starting to pay
attention to the reliability and transparency of CSR reports. They recognize that passive sustainability
strategies can lead to unusual disclosures of CSR information, damage the company's reputation, and
potentially harm the rights and interests of employees. Because their rights and interests are related to
the company's prospects, employees are very interested in the company's attitude towards sustainable
development strategies. As the main internal stakeholders, employees also expect that the company can
continue to care and grow in a sustainable manner to at least ensure that the company prioritizes their
interests. Thus, the hypothesis can be stated as follows:
Auditors as independent and professional parties, have a role in influencing and directing their clients
to start developing accounting practices such as social and environmental disclosures. Big 4 auditors
require their clients to increase the level of voluntary disclosure including sustainability reports to
increase the company's visibility. The Big 4 auditors are professionally influential in guiding companies
to initiate, promote and guarantee assurance on the sustainability reports issued by the company.
Pressure from the auditor is the reason for the company to consider issuing a quality sustainability
report.(R. Trianaputri, & D. Djakman, 2019)
Having significant voting rights Centralized ownership leads to better management control and
oversight, and management's ability to act opportunistically, which could be detrimental to
shareholders, such as withholding or not disclosing environmental and community information, is
reduced. Thus, the hypothesis can be stated as follows:
Slide 9
According to(Sugiyono, 2019)population is a generalization area consisting of: objects / subjects that
have certain quantities and characteristics set by researchers to be studied and then drawn conclusions.
Population The research population is manufacturing, agricultural and mining companies listed on the
Indonesia Stock Exchange (IDX) from 2018 to 2021.
According to(Sugiyono, 2019)sample is part of the number and characteristics possessed by the
population.
The sample in this study was obtained using a purposive sampling method. The purposive sampling
method is a method of taking samples of data sources with certain criteria or considerations. The sample
criteria in this study are as follows: 1. Manufacturing, Agriculture and Mining Companies listed on the
Indonesia Stock Exchange 2018-2021 2. Companies that report a complete sustainability report during
the 2018- 2021 observation period. 3. Companies that report complete annual reports and financial
statements during the 2018-2021 observation period.
The type of data used in this research is secondary data. According toSugiyono (2018)secondary data,
namely data sources that do not directly provide 39 data to data collectors, for example through other
people or through documents. This study uses quantitative research. Quantitative research Data is
measured by a numerical scale (numbers). Quantitative uses a numerical or metric scale so that it can
be transformed through mathematical operations and complete statistical analysis(Sugiyono, 2017)
The data collection method in this study was carried out using the documentation method, namely by
means of a survey, classification and analysis of secondary data in the form of a sustainability report
published on the data source website.
Operationalization of Variables
Slide 10
DATA ANALYSIS
Descriptive analysis is used to describe the variables of the study. Descriptive statistics deals with the
collection and merging of data and displays the combined results. In this study, descriptive statistics
were collected in the form of maximum data, minimum, average data, and standard deviation for
employee variables, government, creditors and competitors. Descriptive statistics also describe the
frequency of each category and the overall sample percentage of sustainability reporting disclosures.
The current study uses data processing techniques carried out through the Statistical Package for Social
Sciences (SPSS) 25 program, where the classical assumption test used in the current study is the
normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test.
ACCORDING TO PRIYATNO 2012 Multiple linear regression analysis is a study of the dependence
of one dependent variable with one or more independent variables, with the aim of estimating and
predicting the population mean or the average value of the dependent variable based on the known
values of the independent variables (Priyatno, 2012). The regression equation in this study is as follows:
SRD= a+ b1X1 + b2X2 + b3 X3 + e
WHERE
α = Konstanta
X2 = big4 audit
X3 = institutional ownership
How strong is the relationship between two or more independent variables and one dependent variable
(eg how does the level of rainfall, temperature, and the amount of fertilizer added affect plant growth).
Predict the value of the dependent variable when the independent variable has a known value (eg to
predict crop yield with a certain amount of rainfall, temperature and addition of fertilizer).