The Role of CSR Committee in the Sustainability Reporting on the Financial Performance of Energy Sector Companies in Indonesia

Abstract

ESG issues have gained considerable attention as companies increasingly focus on disclosing both financial and non-financial information. This research aims to assess the partial and simultaneous impact of ESG performance on ROA and Tobin's Q, with moderation by the CSR committee. Disclosure information and financial data for companies in the energy sector companies in Indonesia were sourced from financial reports and sustainability reports. encompassing a total of 78 company period the years 2013 to 2022. After applying criteria for companies disclosing ESG information used standard GRI, a subset of 43 companies was identified. The analysis commenced with Chow test, Lagrange, and Hausman before moderation, followed by tests after moderation by the CSR committee using STATA. The research finding, before moderation by the CSR committee, revealed that ESG performance had a positive and significant impact on ROA, while its effect on Tobin's Q was negative and insignificant. Then moderation by the CSR committee, indicated that the presence of a CSR committee positively moderated the impact of ESG performance on ROA, albeit insignificantly. Regarding Tobin's Q, the CSR committee's presence negatively moderates the impact of ESG performance, with insignificance. Further examinations post-moderation revealed that the presence of a CSR committee does not exert a significant moderating effect. The findings of this research also show that in practice sustainability reporting in Indonesian energy sector companies has not met expectations regarding reporting of non-financial information. However, reporting non-financial information remains an effort to show the public that the company has tried to operate ethically and sustainably.