Driving GRI-Based Sustainability Reporting through Board Characteristics and Skills in Indonesia’s Non-Financial Sector
Keywords:
Board characteristics, board skills, corporate governance, gender diversity, GRI standards, sustainability reporting
Abstract
This study examines the influence of board characteristics and skills on sustainability reporting (SR) in Indonesias non-financial sector, focusing on companies listed on the Indonesia Stock Exchange (IDX) between 2021 and 2023. Using the Generalized Least Squares method, the study investigates how board size, independence, gender diversity, and specific skills impact the quality of sustainability reports, assessed using the Global Reporting Initiative (GRI) standards. Results show that board size negatively affects SR, indicating that smaller boards with the right composition are more effective in enhancing sustainability disclosures. Board independence was found to have no significant impact, suggesting that merely meeting regulatory requirements may undermine its intended purpose. Board gender diversity, however, positively influenced SR, as women on boards tend to be more engaged with sustainability and stakeholders. Additionally, board-specific skills were found to have no significant effect on SR. Among control variables, firm profitability and age positively influenced SR, while leverage negatively affected it, indicating that highly leveraged firms are motivated to enhance sustainability reporting to gain stakeholder trust. This study provides valuable insights into corporate governance and sustainability reporting, offering recommendations for future research and policy improvements in Indonesias business ecosystem.
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References
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Nuhu, Y., & Alam, A. (2024). Ownership structure and sustainability reporting: emerging economies evidence. International Journal of Accounting and Information Management, 32(5), 883–908. https://doi.org/10.1108/IJAIM-09-2023-0228
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Pradana, F. A., Dabo, M. El, Ricardo, W., Lestari, H. S., & Margaretha, F. (2024). The Influence of Ownership Structure, Board Composition and Financing Decisions on the Performance of Manufacturing Companies in the Consumer Goods Sector. Sentralisasi, 13(2), 64–82. https://doi.org/10.33506/sl.v13i2.3205
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Setiani, E. P., & Novitasari, B. T. (2024). Exploring the Impact of Board Attributes on ESG Scores of Indonesian Companies. Nominal Barometer Riset Akuntansi Dan Manajemen, 13(1), 131–143. https://doi.org/10.21831/nominal.v13i1.72362
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Umar, U. H., Firmansyah, E. A., Danlami, M. R., & Al-Faryan, M. A. S. (2024). Revisiting the relationship between corporate governance mechanisms and ESG disclosures in Saudi Arabia. Journal of Accounting and Organizational Change, 20(4), 724–747. https://doi.org/10.1108/JAOC-01-2023-0011
Yadav, P., & Jain, A. (2023). Sustainability disclosures and corporate boards: a stakeholder approach to decision-making. Journal of Applied Accounting Research, 24(5), 1027–1047. https://doi.org/10.1108/JAAR-10-2022-0279
Agnese, P., Cerciello, M., Giacomini, E., & Taddeo, S. (2023). Environmental, social and governance controversies: the role of European bank boards. Management Decision, 61(12), 3739–3754. https://doi.org/10.1108/MD-01-2023-0082
Al Naim, A. S., & Alomair, A. (2024). Board Composition and Environmental, Social, and Governance Reporting: Impact of Foreign and Busy Directors in Saudi-Listed Firms. Sustainability (Switzerland), 16(20). https://doi.org/10.3390/su16208985
Alkayed, H., & Omar, B. F. (2023). Determinants of the extent and quality of corporate social responsibility disclosure in the industrial and services sectors: the case of Jordan. Journal of Financial Reporting and Accounting, 21(5), 1206–1245. https://doi.org/10.1108/JFRA-05-2021-0133
Al-Qudah, A. A., & Houcine, A. (2024). Firms’ characteristics, corporate governance, and the adoption of sustainability reporting: evidence from Gulf Cooperation Council countries. Journal of Financial Reporting and Accounting, 22(2), 392–415. https://doi.org/10.1108/JFRA-02-2023-0066
Alta’any, M., Tauringana, V., Zalata, A., & Achiro, L. O. (2024). Unpacking sustainability reporting dimensions: the impact of board characteristics. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-09-2023-0568
Casciello, R., Maffei, M., & Meucci, F. (2024). Board characteristics and Sustainable Development Goals disclosure: evidence from European state-owned enterprises. Journal of Public Budgeting, Accounting and Financial Management. https://doi.org/10.1108/JPBAFM-06-2023-0099
Chairina, C., & Tjahjadi, B. (2023). Green Governance and Sustainability Report Quality: The Moderating Role of Sustainability Commitment in ASEAN Countries. Economies, 11(1). https://doi.org/10.3390/economies11010027
Desoky, A. M. (2024). The influence of board and audit committee characteristics on CSR reporting in Bahrain: the legitimacy perspective. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-12-2023-0743
Disli, M., Yilmaz, M. K., & Mohamed, F. F. M. (2022). Board characteristics and sustainability performance: empirical evidence from emerging markets. Sustainability Accounting, Management and Policy Journal, 13(4), 929–952. https://doi.org/10.1108/SAMPJ-09-2020-0313
Erin, O. A., & Ackers, B. (2024). Corporate board, assurance and sustainability reporting practices: a focus on selected African countries. Journal of Accounting and Organizational Change, 20(6), 85–118. https://doi.org/10.1108/JAOC-07-2023-0123
Githaiga, P. N., & Kosgei, J. K. (2023). Board characteristics and sustainability reporting: a case of listed firms in East Africa. Corporate Governance (Bingley), 23(1), 3–17. https://doi.org/10.1108/CG-12-2021-0449
Hamoudah, M. M., Banhmeid, B., Alahdal, W. M., & Sahu, M. (2024). Corporate governance and emission performance: Malaysian evidence on the moderating role of environmental innovation. Discover Sustainability, 5(1). https://doi.org/10.1007/s43621-024-00768-4
Hamoudah, M. M., Banhmeid, B., Alahdal, W. M., & Sahu, M. (2024). Corporate governance and emission performance: Malaysian evidence on the moderating role of environmental innovation. Discover Sustainability, 5(1). https://doi.org/10.1007/s43621-024-00768-4
Hananto Andreas, H., & Satya Wacana Ming Lei Chang, K. (2023). Predicting Board Diversity and Corporate Social Responsibility Disclosure in Indonesia Companies. Review of Integrative Business and Economics Research, 13(3), 364.
Ho, W. K., Gultom, N. D., Susela, S. D., Singh, J., Kanagasabapathy, S., & Hashim, H. A. (2024). Do board characteristics influence sustainability-related disclosures? Evidence from an emerging market. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-07-2023-0419
Hoyos Giraldo, F. A., Baeza Muñoz, M. de los Á., & Delgado-Martínez, E. (2024). Assurance Practices in Colombia’s Non-Financial Sectors: Enhancing Sustainability Report Reliability. Sustainability (Switzerland), 16(23). https://doi.org/10.3390/su162310371
Jiang, Y., García-Meca, E., & Martinez-Ferrero, J. (2023). Do board and ownership factors affect Chinese companies in reporting sustainability development goals? Management Decision, 61(12), 3806–3834. https://doi.org/10.1108/MD-01-2023-0113
Jibril, R. S., Isa, M. A., Maigoshi, Z. S., & Hamid, K. T. (2024). Audit committee attributes, board of director’s independence and energy disclosure for environmental sustainability in Nigeria. International Journal of Innovation Science, 16(2), 391–419. https://doi.org/10.1108/IJIS-08-2022-0149
Kumar, P. (2024). The impact of executives’ compensation and corporate governance attributes on voluntary disclosures: Does audit quality matter? Journal of Applied Accounting Research, 25(2), 240–263. https://doi.org/10.1108/JAAR-11-2022-0302
Kwarteng, P., Appiah, K. O., & Addai, B. (2023). Influence of board mechanisms on sustainability performance for listed firms in Sub-Saharan Africa. Future Business Journal, 9(1). https://doi.org/10.1186/s43093-023-00258-5
Luh, P. K., Arthur, M., Fiador, V., & Kusi, B. A. A. (2024). Gender of firm leadership and environmental, social and governance (ESG) reporting: evidence from banks listed on Ghana Stock Exchange. Gender in Management, 39(6), 778–795. https://doi.org/10.1108/GM-03-2023-0110
Muhmad, S. N., Mohamad Ariff, A., Abd Majid, N., & Muhamad, R. (2023). Corporate sustainability commitment and cash holding: evidence from Islamic banks in Malaysia. Journal of Islamic Accounting and Business Research, 14(5), 782–811. https://doi.org/10.1108/JIABR-09-2020-0276
Nuhu, Y., & Alam, A. (2024). Ownership structure and sustainability reporting: emerging economies evidence. International Journal of Accounting and Information Management, 32(5), 883–908. https://doi.org/10.1108/IJAIM-09-2023-0228
Oware, K. M., Amoako, G. K., & Halidu, O. B. (2023). Does the gender of board members influence the choice of sustainability report format of listed firms? Empirical evidence from India. Managerial Finance, 49(3), 492–511. https://doi.org/10.1108/MF-05-2022-0242
Pradana, F. A., Dabo, M. El, Ricardo, W., Lestari, H. S., & Margaretha, F. (2024). The Influence of Ownership Structure, Board Composition and Financing Decisions on the Performance of Manufacturing Companies in the Consumer Goods Sector. Sentralisasi, 13(2), 64–82. https://doi.org/10.33506/sl.v13i2.3205
Peraturan Otoritas Jasa Keuangan.2017. Penerapan Keuangan Berkelanjutan Bagi Lembaga Jasa Keuangan, Emiten, dan Perusahaan Publik, https://www.ojk.go.id.
Sepulveda-, M. D. D. C., Fong Reynoso, C., & Llamosas-Rosas, I. (2024). Board of directors effect on environmental, social and governance performance in publicly traded non-financial firms. Corporate Governance (Bingley), April. https://doi.org/10.1108/CG-09-2023-0409
Setiani, E. P., & Novitasari, B. T. (2024). Exploring the Impact of Board Attributes on ESG Scores of Indonesian Companies. Nominal Barometer Riset Akuntansi Dan Manajemen, 13(1), 131–143. https://doi.org/10.21831/nominal.v13i1.72362
Singhania, S., Singh, J., Aggrawal, D., & Rana, S. (2024). Board gender diversity and sustainability reporting quality: a generalized ordered logit approach. Kybernetes, 53(8), 2679–2699. https://doi.org/10.1108/K-07-2022-0963
Umar, U. H., Firmansyah, E. A., Danlami, M. R., & Al-Faryan, M. A. S. (2024). Revisiting the relationship between corporate governance mechanisms and ESG disclosures in Saudi Arabia. Journal of Accounting and Organizational Change, 20(4), 724–747. https://doi.org/10.1108/JAOC-01-2023-0011
Yadav, P., & Jain, A. (2023). Sustainability disclosures and corporate boards: a stakeholder approach to decision-making. Journal of Applied Accounting Research, 24(5), 1027–1047. https://doi.org/10.1108/JAAR-10-2022-0279
Published
2025-04-25
Section
Original Articles
Copyright (c) 2025 Wina, Yosia Oscar, Farah Margaretha Leon, Henny Setyo Lestari
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