Corporate Governance: Driving Climate Change Disclosure and Advancing SDGs

Abstract

Climate change presents a critical challenge to achieving the 2030 Sustainable Development Goals (SDGs), particularly SDG 13 on Climate Action. This study examined the effect of corporate governance on carbon emission disclosure and carbon performance among 150 non-financial firms listed on the Indonesia Stock Exchange (IDX) from 2016 to 2022. Drawing on stakeholder, legitimacy, agency, and resource dependence theories, the study utilized panel data comprising 468 firm-year observations and employed ordinary least squares (OLS) regression to assess both direct and moderating effects. The findings indicate that governance attributes covering board size, board gender diversity, foreign ownership, and the presence of a CSR committee had a positive effect on carbon emission disclosure and carbon performance. Moreover, these governance factors enhanced the correlation between disclosure and performance, suggesting that robust governance could strengthen the environmental impact of transparency. However, board independence exhibited a negative or statistically insignificant effect, highlighting a potential disconnect between governance expectations and environmental oversight in emerging markets. Despite increasing awareness, the levels of carbon disclosure and performance in Indonesia remained low, averaging only 27.8% and 6.6%, respectively. This study provides policy recommendations to strengthen ESG regulations, encourages firms to institutionalize sustainability practices, and calls for cross-country comparative research to improve generalizability.

1. Introduction

In the contemporary era, climate change has emerged as a critical topic of discussion among various stakeholders, including governments, corporations, and investors (Rahman Belal et al., 2010), due to its significant threat to the sustainability of human life (Arslan et al., 2022; Herman & Shenk, 2021; Sinha & Chaturvedi, 2019). Climate change affects multiple domains, such as the environmental, economic, governmental, and social domains. One prominent example is the significant increase in greenhouse gas (GHG) concentrations in the atmosphere (Cahyono et al., 2024). As the driving force of economic activity, companies are considered major contributors to GHG emissions (Rahman Belal et al., 2010). Consequently, shareholders and stakeholders are increasingly pressuring firms to manage their emissions responsibly (Toukabri & Mohamed Youssef, 2023). In response to such pressures, corporate involvement in mitigating GHG emissions is critical (Tang & Luo, 2014). This responsibility can be fulfilled by reducing emissions and transparently reporting relevant information related to carbon accountability.

The linkage between corporate carbon management, reflected in carbon performance, and carbon responsibility, represented by carbon disclosure in sustainability reports, is viewed as a strategic approach toward achieving the Sustainable Development Goals (SDGs), particularly when addressing climate change. This connection aligns with specific components of the SDGs that directly address environmental sustainability and climate action (Indonesia, 2024). Given the global nature of these challenges, the participation of all nations, developed and developing alike, is imperative (Sachs, 2012). Hence, corporate carbon management across diverse national contexts is essential, considering businesses’ pivotal role in achieving SDG targets, especially those related to climate change. Beyond mitigating environmental harm, such management practices enhance corporate reputation and reflect a commitment to stakeholder interests.

Indonesia offers a distinct and significant case for analyzing corporate governance and climate-related transparency. As one of the world’s largest greenhouse gas emitters and a rapidly industrializing economy, Indonesia faces considerable environmental vulnerabilities. However, in contrast to many developed countries implementing mandatory environmental, social, and governance (ESG) reporting frameworks, Indonesia still lacks stringent carbon disclosure regulations. This regulatory gap has led to inconsistent and often low-quality reporting practices. The Indonesian government has set ambitious climate targets, including reducing GHG emissions by 43.2% with international support by 2030 and achieving net-zero emissions by 2060. These goals underscore the urgent need for more robust corporate governance mechanisms. Hence, studying Indonesia provides valuable insights into how firms in emerging markets navigate climate objectives amidst regulatory uncertainty and limited institutional enforcement. The findings might offer meaningful implications for other developing countries seeking to advance the SDG 13 agenda on climate action.

Despite increasing global awareness, companies in Indonesia continue to disclose carbon emission responsibilities at relatively low rates (Abdullah et al., 2020; Hermawan et al., 2018; Nasih et al., 2019; Solikhah & Wahyudin, 2020). Empirical investigations reveal that, while sustainability reporting has gained traction, many Indonesian firms offer limited disclosures related specifically to carbon emissions. For instance, I. F. S. Wahyuningrum et al. (2024) found that the quality of carbon emission disclosure among non-financial companies in Indonesia averaged only 46%. Other studies have reported even lower figures, such as 38.9% (Ratmono, 2021) and 28.06% (Mahmudah et al., 2023), indicating a superficial approach to carbon transparency. Further supporting this claim, Gunawan et al. (2022), examined the evolution of sustainability reporting practices and concluded that, although formal reports exist, their environmental content often lacks material depth. Research conducted in various countries suggests that many companies were not genuinely committed to carbon reduction or meeting their environmental responsibilities (Blanco et al., 2017; Caby et al., 2020; Jiang et al., 2023). Moreover, carbon performance becomes a contentious issue when carbon disclosure remains insufficient. Although Indonesia ratified the Kyoto Protocol on June 28, 2004, and the Paris Agreement, and has pledged to achieve net-zero emissions by 2060—targeting a reduction in greenhouse gas emissions by 31.89% through domestic efforts and 43.20% with international support by 2030 (Forestry, 2021, 2023)—the realization of these commitments has remained far from satisfactory given the current state of corporate carbon responsibility and performance.

Corporate governance plays a pivotal role in improving carbon emission disclosure, enhancing carbon performance, and aligning toward sustainability objectives. Effective governance enables companies to implement policies that support sustainable development practices (Scheyvens et al., 2016). Countries such as the United Kingdom, France, Australia, and New Zealand, which have mandated carbon emission reporting, recognize strong corporate governance as a key driver for improved carbon disclosure and performance (Houqe & Khan, 2023; Karim et al., 2021; Tauringana & Chithambo, 2015). Indicators of good corporate governance include gender diversity in board composition, especially the presence of female directors (Elsayih et al., 2021; Elsayih et al., 2018; Liao et al., 2015; Oyewo, 2023); the inclusion of professional and independent representatives on the board of commissioners (Elsayih et al., 2021; Liao et al., 2015; Narsa Goud, 2022; Oyewo, 2023); proportional board characteristics; the establishment of environment-related committees (Liao et al., 2015); and the presence of foreign board members (Kim et al., 2021). Strong corporate governance enhances decision-making effectiveness, policy implementation, and overall company performance, thereby positively affecting carbon emission reporting and environmental accountability. Through these governance mechanisms, companies can contribute to the achievement of the SDGs, in particular by prioritizing carbon emission reductions.

Despite a growing body of literature addressing the role of corporate governance in environmental accountability, existing studies remain fragmented, often focusing separately on either carbon emission disclosure or environmental performance. Limited attention has been given to the interplay between these two elements, particularly within the broader framework of the SDGs. Most of the existing research is concentrated in developed countries, where ESG practices—referring to the non-financial performance indicators used by stakeholders to evaluate a company’s sustainability and ethical impact—are more institutionalized and mature. In contrast, empirical studies from emerging economies such as Indonesia remain sparse and yield inconsistent results. Furthermore, prior research frequently overlooked the moderating role of governance structures in linking disclosure to actual performance outcomes. This study aimed to address these gaps by examining how various governance dimensions—including board size, board independence, gender diversity, foreign ownership, and the presence of corporate social responsibility (CSR) committees—affect disclosure and performance individually and moderate the correlation between them. By situating the analysis within the context of SDG 13 (Climate Action), this paper offers new insights for regulators, firms, and stakeholders on the governance mechanisms that can enhance climate transparency and promote sustainable business practices in emerging markets.

The research contributes to the existing literature by exploring the interplay between corporate governance, carbon disclosure, and environmental performance concerning global sustainability objectives. The United Nations SDGs comprise 17 global commitments to promote inclusive development and environmental stewardship by 2030 (Krannich & Reiser, 2023). This study primarily focused on three interconnected goals: SDG 12 (Responsible Consumption and Production), through the disclosure of carbon emissions in sustainability reports; SDG 13 (Climate Action), by evaluating corporate efforts in managing and reducing greenhouse gas emissions; and SDG 5 (Gender Equality), by investigating the role of gender-diverse governance structures in climate-related accountability. This research identified corporate governance as a key factor affecting carbon disclosure and environmental performance and as a moderator in the correlation between them. Unlike prior research, it simultaneously examined both aspects within the context of the SDGs, addressing inconsistencies found in earlier studies (Cordova et al., 2021; Elsayih et al., 2021; Narsa Goud, 2022; Liao et al., 2015; Oyewo, 2023). In addition, the paper provides empirical evidence on the effect of corporate governance on carbon emission disclosure and performance in Indonesia—an area that remains underexplored. While previous studies have largely focused on developed countries, where ESG reporting is more prevalent due to higher public awareness of environmental and social issues, similar studies in developing countries such as India, Bangladesh, and nations in Africa (Bedi & Singh, 2024b; Chakraborty & Dey, 2023; Cordova et al., 2021; Narsa Goud, 2022) have seldom examined the correlation between disclosure and carbon performance concurrently.

As no comparable study has been conducted in Indonesia, a developing country, this paper is the first to analyze the simultaneous effect of corporate governance on carbon disclosure and environmental performance. Accordingly, this study addressed the following research questions:

• Does corporate governance have an effect on climate change disclosure and progress toward the SDGs?
• Does corporate governance moderate the effect of carbon disclosure on environmental performance and SDG progress?

This research utilized total carbon emission data to construct a carbon performance database and applied the content analysis of 18 corporate carbon emission indicators to assess carbon disclosure. These measurement approaches are widely recognized in the literature (Bae Choi et al., 2013; Datt et al., 2020; Mateo-Márquez et al., 2022; I. F. S. Wahyuningrum et al., 2022a). The structure of this paper is as follows: Section 1 presents the background and highlights the phenomenon and research gaps. Section 2 reviews the relevant literature and develops the research hypotheses. Section 3 outlines the methodology employed. Section 4 discusses the research findings. Finally, Section 5 concludes the paper with a summary of key insights and implications.

2. Literature Review and Hypotheses Development

2.1. Literature Review

This study adopted a multi-theoretical approach by integrating legitimacy theory, stakeholder theory, agency theory, and resource dependence theory to examine the correlation between corporate governance, carbon emission disclosure, and carbon performance. Together, these theories provide a robust foundation for developing hypotheses and understanding the expected behavior of firms in emerging economies, particularly within the framework of SDG 13.

Several prior studies have employed various theoretical perspectives to explain environmental disclosure, including legitimacy theory, stakeholder theory, resource dependence theory, and agency theory (Chakraborty & Dey, 2023; Elleuch Lahyani, 2022). However, most of these studies have applied the theories in isolation, resulting in fragmented conclusions—especially in the context of developing countries with weaker ESG regulations. In response, the present study adopted a multi-theoretical lens to analyze climate change disclosure. According to legitimacy theory, firms disclose environmental information to gain or maintain legitimacy in the eyes of society (Dowling & Pfeffer, 1975). One critical dimension of legitimacy lies in the disclosure of carbon emissions, which signals alignment with societal expectations for environmental accountability (Elleuch Lahyani, 2022).

Stakeholder theory posits that a company’s long-term survival depends on its ability to effectively address the needs and expectations of a diverse set of stakeholders, particularly those with significant influence (Schaltegger et al., 2017). A key stakeholder expectation is the provision of transparent reports on environmental responsibilities, including carbon emission disclosures in sustainability reports (Freeman, 1984; Hardiyansah et al., 2021). Corporate governance mechanisms, such as board independence and gender diversity, may serve as indicators of a firm’s stakeholder orientation and its commitment to environmental transparency and performance.

Resource dependence theory suggests that the composition of a company’s board, particularly regarding the diversity of backgrounds, introduces varied perspectives that can enhance strategic decision-making (Khatib et al., 2021). This diversity provides management with broader insights into environmental responsibilities, thereby supporting improvements in environmental performance and carbon emission disclosure (de Villiers et al., 2011). From this perspective, foreign ownership and the establishment of CSR committees function as external resources that strengthen governance capabilities and align disclosure practices with global ESG expectations.

On the other hand, agency theory highlights the risk that managers may act opportunistically and conceal information from shareholders, leading to agency problems and information asymmetry (Al-Shaer, 2020). Hence, enhancing the quality and transparency of disclosures is essential to mitigate these issues (García-Sánchez & Noguera-Gámez, 2017). Carbon emission disclosure, in particular, is regarded as a mechanism for reducing information asymmetry (Ben-Amar et al., 2017). Board independence and diverse governance structures are theorized to limit managerial discretion and promote objective environmental reporting, especially in environments with limited external regulatory enforcement.

Despite the relevance of these theoretical frameworks, existing research has largely overlooked the moderating role of governance characteristics in the correlation between disclosure and performance. Moreover, little is known about how these dynamics unfold in contexts such as Indonesia, where institutional pressures diverge from those in developed economies. The present study sought to fill these gaps by integrating multiple theoretical perspectives to assess the direct and moderating effects of corporate governance on climate-related accountability.

2.2. Hypotheses Development

2.2.1. Board Size

The board of directors is responsible for managing and operating its company in alignment with its interests and objectives (Pramana & Baskoro, 2021). The extent of board involvement significantly affects the development of policies and practices oriented towards sustainable business practices (Spallini et al., 2021). Furthermore, Ben-Amar et al. (2017) emphasize that the board plays a critical role in sustainability strategies, responsible asset management, and the identification and disclosure of significant environmental risks. Drawing on stakeholder theory, a larger board of directors is considered better equipped to represent diverse stakeholder interests and enhance corporate governance (Mansour et al., 2022), thereby promoting improved carbon emission disclosure practices. This condition, in turn, contributes to the company’s legitimacy, as the public perceives it as socially responsible (Deegan, 2002). Resource dependence theory further suggests that a larger board enhances diversity in educational and professional backgrounds, offering broader insights into sustainability issues, particularly in relation to carbon disclosure (Elleuch Lahyani, 2022). A significant positive correlation between board size and carbon emission disclosure has been documented in several studies (Chakraborty & Dey, 2023; He et al., 2019; Toukabri & Mohamed Youssef, 2023). However, other researchers have reported contrasting findings (Ben-Amar et al., 2017; Kılıç & Kuzey, 2019). Based on the existing literature, the following hypotheses were proposed:

H1a. 

Board size has a positive and significant effect on carbon emission disclosure.

H1b. 

Board size has a positive and significant effect on carbon performance.

2.2.2. Board Independence

Independent commissioners, who have no direct affiliation with the company’s management, are expected to serve a more objective and neutral supervisory role, ensuring that managerial decisions are aligned with shareholder interests. In the context of global challenges related to carbon emission management, shareholders increasingly demand transparency. Accordingly, independent commissioners will likely encourage management to disclose carbon emission information, thereby reducing information asymmetry. According to resource dependence theory, independent directors contribute valuable resources that affect strategic corporate disclosures, including environmental and carbon-related disclosures (Hassan & Lahyani, 2020). Several empirical studies support this view, indicating that board independence could enhance the transparency of carbon emission information (He et al., 2019; Nasih et al., 2019; Saraswati et al., 2021). Nonetheless, conflicting evidence exists, with some studies reporting a lack of significant effect or even a negative correlation (Bui et al., 2020; Kılıç & Kuzey, 2019; Riantono & Sunarto, 2022). Based on this diverse evidence, the following hypotheses were formulated:

H2a. 

Board independence has a positive and significant effect on carbon emission disclosure.

H2b. 

Board independence has a positive and significant effect on carbon performance.

The observed negative correlation between board independence and carbon-related practices in this study might be attributable to governance dynamics specific to Indonesia. In such contexts, independent directors often lack environmental expertise or are appointed primarily for regulatory compliance rather than effective oversight (Bansal et al., 2018). As a result, they might be less inclined to engage in long-term ESG strategies such as carbon disclosure, possibly due to risk aversion or a focus on short-term financial performance. This finding contrasts with evidence from developed markets such as Australia and France, where independent boards are generally more empowered and ESG-conscious (Elsayih et al., 2021; Mardini & Lahyani, 2022). However, this is consistent with results from other emerging economies, including Bangladesh (Rahman Belal et al., 2010) and parts of the Middle East, where board independence has not significantly improved sustainability disclosures—likely due to limited environmental literacy and weak institutional enforcement (Al Amosh & Khatib, 2022).

2.2.3. Board Gender Diversity

Board gender diversity is assessed based on the number of women serving on the board. According to Liao et al. (2015), women tend to exhibit a higher sensitivity to sustainability issues compared with men, and their presence on the board can enhance environmental disclosure, particularly about carbon emissions (Ezekiel et al., 2024). As a result, companies may benefit from improved legitimacy and reputational standing (Elmagrhi et al., 2019). From the perspective of stakeholder theory, women are viewed as having different value orientations than men and are generally considered more stakeholder-oriented (Baalouch et al., 2019). Meanwhile, agency theory suggests that the inclusion of women on the board may enhance the board’s ability to monitor managerial opportunism (Elmagrhi et al., 2019; Jensen & Meckling, 1976), thereby improving corporate performance and carbon emission disclosure. Empirical findings on this topic are mixed. Some studies (Elsayih et al., 2018; Elsayih et al., 2021; Ezekiel et al., 2024; Saraswati et al., 2021) have found that the presence of women on the board could promote carbon emission disclosure and enhance carbon performance. In contrast, other studies (Chakraborty & Dey, 2023; Kutlu Furtuna & Sönmez, 2024) reported different outcomes. Accordingly, the following hypotheses were proposed:

H3a. 

Gender diversity has a positive and significant effect on carbon emission disclosure.

H3b. 

Gender diversity has a positive and significant effect on carbon performance.

2.2.4. Foreign Ownership

Prior literature suggests that foreign ownership can directly or indirectly enhance the monitoring of investee firms and stimulate improvements in corporate governance systems (Kim et al., 2021). According to stakeholder theory, environmental responsibility disclosure is one means by which firms can respond to the expectations of foreign shareholders (Al Amosh & Khatib, 2022). From the perspective of resource dependence theory, foreign shareholders often possess superior knowledge and experience regarding international sustainability policies and practices, particularly in the environmental domain (Mardini & Lahyani, 2022). Research on foreign ownership has produced mixed results. Some studies have found that foreign ownership could encourage carbon emission disclosure (Bedi & Singh, 2024a; Kim et al., 2021; Park et al., 2023), while others reported no significant effect (Hatane et al., 2022; Singhania & Bhan, 2024). Based on this, the following hypotheses were proposed:

H4a. 

Foreign ownership has a positive and significant correlation with carbon emission disclosure.

H4b. 

Foreign ownership has a positive and significant effect on carbon performance.

2.2.5. CSR Committee

The corporate social responsibility (CSR) committee is a dedicated body that addresses issues related to a company’s social and environmental responsibilities. Its primary function is to develop effective and efficient policies and strategies to promote environmentally sustainable practices within the organization (Liao et al., 2015). Drawing on resource dependence theory, the presence of a CSR committee provides the company with members who possess relevant knowledge and experience in environmental responsibility. This can enhance the company’s environmental practices and increase transparency. Establishing a CSR committee is a strategic initiative to meet stakeholder expectations, especially those who demand greater accountability for the company’s environmental performance. Moreover, the existence of such a committee can contribute positively to the company’s public image and stakeholder relations. Cordova et al. (2021) found that a CSR committee significantly improved carbon emission disclosure in both African and American corporate contexts. Similarly, Toukabri (2024) also reported a positive effect. Conversely, Elsayih et al. (2018) found no significant effect of a CSR committee on carbon emission disclosure. Based on these findings, the following hypotheses were proposed:

H5a. 

A CSR committee has a positive and significant effect on carbon emission disclosure.

H5b. 

A CSR committee has a positive and significant effect on carbon performance.

2.2.6. Corporate Governance

Stakeholder theory posits that companies play a pivotal role in balancing stakeholder demands with organizational objectives. One approach to meeting these demands is through the transparent disclosure of greenhouse gas (GHG) emission management practices, especially as stakeholders provide essential resources to the company. Accordingly, corporate governance is instrumental in addressing stakeholder expectations. Effective corporate governance can help organizations achieve public legitimacy and enhance their reputation. Prior studies have indicated that governance attributes—such as board independence, frequency of board meetings, gender diversity on the board, and the establishment of environmental committees—contributed positively to carbon emission performance. For example, Elsayih et al. (2021) demonstrated such effects in the Australian context. Given this background, corporate governance practices may serve a moderating role. This study, therefore, investigated whether corporate governance moderated the correlation between carbon emission disclosure and carbon performance. The following hypotheses were formulated:

H6. 

Board size strengthens the effect of carbon emission disclosure on carbon performance.

H7. 

Board independence strengthens the effect of carbon emission disclosure on carbon performance.

H8. 

Board gender diversity strengthens the effect of carbon emission disclosure on carbon performance.

H9. 

Foreign ownership strengthens the effect of carbon emission disclosure on carbon performance.

H10. 

A CSR committee strengthens the effect of carbon emission disclosure on carbon performance.

3. Methodological Approach

3.1. Sample Selection

This study focused on 150 non-financial enterprises listed on the Indonesia Stock Exchange (IDX) from 2016 to 2022, resulting in a total of 428 units of analysis. Employing a purposive sampling technique, the selected firms were those that published both annual and sustainability reports during the study period (see

Table 1. Sample selection.

No	Criteria	Total
1	Non-financial firms registered on the Indonesia Stock Exchange for the period 2016–2022	235
2	Non-financial firms multiplied by 7 years of the research period	1645
3	Firms that do not release annual reports and sustainability reports	(1020)
4	Number of firms—years that release annual reports and sustainability reports	625
5	Companies—years that do not provide complete data on carbon emissions	(157)
6	Companies—years for which complete data on carbon emissions (sample unbalance)	468

Note: The sample selection process was adapted from methodological frameworks established in previous disclosure studies (e.g., Bui et al., 2020; Nasih et al., 2019; I. F. S. Wahyuningrum et al., 2022b) to ensure comparability and methodological rigor.

). The use of pooled regression data implies that companies were included even if they did not report consistently every year.

The 2016–2022 timeframe was selected due to its significance in the context of global climate governance. Notably, Indonesia ratified the Paris Agreement in 2016, signaling a national commitment to reducing GHG emissions. This period, therefore, captures the regulatory and disclosure developments following the agreement, providing a pertinent context for evaluating climate-related reporting practices.

To ensure the reliability of data collection, the study adopted a structured content analysis method based on an 18-item disclosure checklist derived from prior literature. Two trained researchers independently coded the sustainability and annual reports. Discrepancies in the coding were resolved through discussion and reconciliation, thereby minimizing subjectivity and enhancing consistency. This dual-coding approach contributes to the transparency and accuracy of the carbon disclosure measurement.

To address potential model specification issues, the study conducted several robustness checks. Firstly, multicollinearity was assessed using the variance inflation factor (VIF); all variables yielded values well below the threshold of 10 (mean VIF = 1.01), indicating no multicollinearity concerns. Secondly, the Breusch–Pagan test confirmed the absence of heteroskedasticity (p > 0.05). Lastly, the Hausman test was conducted to determine the appropriate estimation technique between fixed and random effects models. The results (p > 0.05) support the selection of the random effects model (REM) as the most suitable approach. Although endogeneity tests and instrumental variable techniques were not employed due to data limitations, this is acknowledged in the limitations section and recommended for future research.

3.2. Research Model

This study utilized secondary data from the annual and sustainability reports of non-financial companies listed on the IDX. These reports are publicly available and re widely used in empirical research on ESG disclosures (Gunawan et al., 2022; Mateo-Márquez et al., 2022). This approach ensures transparency, replicability, and data validity and is further supported by insights from peer-reviewed literature and authoritative texts. The data were analyzed using ordinary least squares (OLS) regression. The research model is presented in the following equations:

CEDit = β0 + β1BSIZEit + β2BINDit + β3GENDERit + β4FOWNit + β5CSR_COMit + β6ROAit + β7DERit + β8SIZEit + e

(1)

CPit = β0 + β1BSIZEit + β2BINDit + β3GENDERit + β4FOWNit + β5CSR_COMit + β6ROAit + β7DERit + β8SIZEit + e

(2)

CPit = β0 + β1BSIZEit + β2BINDit + β3GENDERit + β4FOWNit + β5CSR_COMit + β6 CEDit X BSIZEit + β7 CEDit X BINDit + β8 CEDit X GENDERit + β9 CEDit X FOWNit + β10 CEDit X CSR_COMit + β11ROAit + β12DERit + β13SIZEit + e

(3)

3.3. Measurement of Variables

3.3.1. Dependent Variable

Carbon emission disclosure was measured using content analysis. The methodology employed to assess the level of transparency in emissions reporting adopted the structured content analysis approach from Gunawan et al. (2022). This approach minimizes subjectivity in the analysis and utilizes the Carbon Emissions Disclosure Index, which has been developed and refined in previous studies (Bae Choi et al., 2013; I. F. S. Wahyuningrum et al., 2024; I. F. S. Wahyuningrum et al., 2022a).

The company’s carbon performance was assessed using the carbon intensity ratio, calculated as the amount of GHG emissions divided by the company’s total revenue (in thousands of US Dollars or Indonesian Rupiah). This measurement method, adopted from Bui et al. (2020), indicates that a higher carbon intensity ratio reflects poorer corporate performance in reducing emissions.

3.3.2. Independent Variable

Corporate governance, represented by board size, board independence, board gender diversity, foreign ownership, and the presence of a CSR committee, served as both an independent and moderating variable. The operational definitions and measurements are provided in

Table 2. Variable operationalization.

Variable	Measurements	Reference
Carbon emission disclosure (CED)	The analytical approach to the content disclosed in a company’s sustainability report and assessed on a scale of 0–5, the formula is as follows: ${\displaystyle \frac{\mathrm{Total}\mathrm{disclosure}\mathrm{score}}{18}}$	(Bae Choi et al., 2013; I. F. S. Wahyuningrum et al., 2022b)
Carbon performance (CP)	Carbon intensity ratio is obtained by calculating the amount of GHG emissions from scope 1 and 2 divided by the company’s total revenue.	(Bui et al., 2020)
Board size (BSIZE)	Number of directors in the board.	(I. Wahyuningrum et al., 2020)
Board independece (BIND)	The proportion of independent commissioners relative to the total board.	(Mateo-Márquez et al., 2022)
Board gender diversity (GENDER)	The ratio of women to total board members.	(Miller & del Carmen Triana, 2009; I. F. S. Wahyuningrum et al., 2022b)
Foreign ownership (FOWN)	Shares of a company owned by foreign parties divided by shares outstanding.	(Kim et al., 2021)
The presence of the CSR committee (CSR_COM)	CSR committee presence is scored as 1 if present, 0 if absent (dummy variable).	(Mateo-Márquez et al., 2022)
Profitability (ROA)	Return to asset ratio: ${\displaystyle \frac{\mathrm{Net}\mathrm{Profit}}{\mathrm{Total}\mathrm{Asset}}}$	(Uyar et al., 2021)
Leverage (DER)	Debt to equity ratio: ${\displaystyle \frac{\mathrm{Total}\mathrm{Liquidity}}{\mathrm{Total}\mathrm{Equity}}}$	(Lu & Abeysekera, 2014)
Firm size (SIZE)	Total company assets.	(Elsayih et al., 2021)

Note: This table presents the measurement approaches for the variables used in this study.

.

3.3.3. Control Variables

This study included three control variables: profitability (measured by return on assets (ROA)), leverage (debt-to-equity ratio (DER)), and firm size (SIZE). These variables were included due to their theoretical and empirical significance in affecting both disclosure practices and emission performance (Lu & Abeysekera, 2014; Uyar et al., 2021). Profitability captures a firm’s financial capacity to invest in sustainability initiatives, leverage reflects its risk profile and financial obligations, and firm size serves as a proxy for corporate visibility, public scrutiny, and the availability of resources for climate-related disclosures (Bui et al., 2020; Elsayih et al., 2021).

4. Results and Discussion

4.1. Descriptive Statistical Analysis

As shown in

Table 3. Descriptive statistical analysis.

	N	Min	Max	Mean	Std. Dev
CED	468	0.01	0.60	0.2780	0.11274
CP	468	0.00	0.95	0.0663	0.17602
BSIZE	468	2.00	15.00	5.6517	2.10446
BIND	468	0.00	1.00	0.4213	0.12828
GENDER	468	0.00	0.63	0.1181	0.12958
FOWN	468	0.00	1.00	0.3068	0.30845
CSRCOM	468	0.00	9.00	0.1709	0.79657
ROA	468	−0.87	25.52	0.1452	1.23518
DER	468	−4.17	90.52	1.8196	5.25789
SIZE	468	24.85	36.92	31.4026	2.42391

Note: This table presents the results of the descriptive statistical analysis.

, the average carbon emission disclosure (CED) score was 0.278, with a standard deviation of 0.112. The average carbon performance (CP) score was 0.066, indicating that the carbon performance of Indonesian non-financial enterprises remained relatively low. The descriptive analysis revealed that some companies reported minimal information on their carbon emissions, as indicated by the low minimum values for both CED and CP. In Indonesia, only 28% of non-financial enterprises disclosed information related to their carbon emissions. This suggests that many firms have adopted a minimalist approach to environmental disclosure. Furthermore, the average carbon performance level was merely 7%, reflecting a generally poor level of carbon performance among these firms. This finding could be attributed to weak corporate initiatives, as well as to the uneven awareness and implementation of carbon emission management and disclosure practices across the sector.

4.2. Multiple Regression Analysis Results

A multicollinearity test was conducted using the variance inflation factor (VIF). All independent variables had VIF values well below the critical threshold of 10 (mean VIF = 1.01), indicating no multicollinearity issues. The Breusch–Pagan test results also indicated no heteroscedasticity (p > 0.05). Consequently, the random effects model (REM) was selected as the most appropriate estimation model. According to the regression results in

Table 4. Multiple regression analysis results (Models 1 and 2).

Variable	CED		CP
	Coefficient	t	Coefficient	Coefficient
Intercept	0.0241153	3.35	0.3783405	3.51
BSIZE	0.0117046	4.58 ***	0.0149649	3.75 ***
BIND	−0.0089438	−1.22 *	−0.063113	−1.316 *
GENDER	0.009022	1.12 *	0.1189904	1.86 *
FOWN	0.0021	1.38 *	0.0901937	3.38 ***
CSRCOM	0.0084059	1.86 **	0.0184932	1.86 *
ROA	0.0019209	0.47	0.0017666	0.28
DER	−0.0004015	−0.42	0.0008972	0.60
SIZE	0.0060985	2.76 ***	−0.0123612	3.58 ***
Number of Obs	468		468
Adj R2/Pseudo R2	0.0719		0.0747
Prob > chi2	0.0000		0.0000
Breusch–Pagan test	1.000		1.000
Mean VIF	1.01		1.09
Hausman (Prob.)	0.8076		0.7096

Note: This table reports the outcomes of OLS regression for CED and CP. Significance levels are denoted by ***, **, and * for 1%, 5%, and 10%, respectively.

, hypotheses H1a and H1b were accepted. Board size (BSIZE) was significantly associated with CED and CP at the 1% level, suggesting that BSIZE had a positive effect on both outcomes. However, board independence (BIND) had a negative effect on CED and CP, with a significance level of 10%, leading to the rejection of H2a and H2b. Board gender diversity (GENDER) exhibited a positive and statistically significant effect (p < 0.10) on both CED and CP, thereby supporting H3a and H3b. Similarly, hypotheses H4a and H4b were accepted, as foreign ownership (FOWN) had a positive correlation with CED and CP at the 10% and 1% significance levels, respectively. Hypotheses H5a and H5b were also accepted, with corporate social responsibility committees (CSR_COM) significantly improving CED and CP at the 5% and 10% levels, respectively. Among the control variables, return on assets (ROA) and debt-to-equity ratio (DER) did not demonstrate significant effects on either CED or CP. In contrast, firm size (SIZE) did have a significant effect on both.

The results of the moderation analysis are presented in

Table 5. Multiple regression analysis results (Model 3).

Variable	Carbon Performance (CP)		CP (Moderated by Corporate Governance (CG))
	Coefficient	t	Coefficient	t
Intercept	0.3706356	4.48 ***	0.3862809	5.41
CED			0.0241153	3.75 ***
CED*BSIZE			0.0602554	1.315 *
CED*BIND			0.1161078	−1.87 *
CED*GENDER			0.0895227	3.38 ***
CED*FOWN			0.0158074	1.86 *
CED*CSRCOM			0.0011529	1.62 *
BSIZE			0.0149649	2.81 ***
BIND			0.1163113	0.98
GENDER			0.1189904	−1.86 *
FOWN			0.0901937	3.43 ***
CSRCOM			0.0184932	1.62 *
ROA	0.0027538	0.43	0.0017666	0.18
DER	0.0010026	0.67	0.0008972	0.70
SIZE	0.0100531	3.02 ***	0.0143097	4.20 ***
Number of Obs	468
Adj R2/Pseudo R2	0.11116
Prob > chi2	0.0000
Breusch–Pagan test	1.000
Mean VIF	1.08
Hausman (Prob.)	1.000

Note: This table reports the outcomes of OLS regression for CED. Significance levels are denoted by ***, and * for 1%, 5%, and 10%, respectively.

. The interaction term BSIZE*CED was significant at the 1% level for CP, indicating that BSIZE strengthened the effect of CED on CP, thus supporting H6. Conversely, BIND*CED was significant at the 10% level with a negative coefficient, suggesting that BIND weakened the correlation between CED and CP; hence, H7 was rejected. The interaction term GENDER*CED was significant at the 1% level, implying that gender diversity strengthened the positive effect of CED on CP. Therefore, H8 was accepted. Similarly, FOWN*CED was significant at the 10% level, supporting H9. Finally, the interaction term CSR_COM*CED was significant at the 10% level, confirming H10 and indicating that CSR communication moderated the correlation between CED and CP. A summary of the hypotheses and empirical results is presented in

Table 6. Summary of hypotheses and empirical results.

Hypothesis	Statement	Result
H1a	Board size has a positive and significant effect on carbon emission disclosure.	Supported
H1b	Board size has a positive and significant effect on carbon performance.	Supported
H2a	Board independence has a positive and significant effect on carbon emission disclosure.	Not supported (negative)
H2b	Board independence has a positive and significant effect on carbon performance.	Not supported (negative)
H3a	Gender diversity has a positive and significant effect on carbon emission disclosure.	Supported
H3b	Gender diversity has a positive and significant effect on carbon performance.	Supported
H4a	Foreign ownership has a positive and significant effect on carbon emission disclosure.	Supported
H4b	Foreign ownership has a positive and significant effect on carbon performance.	Supported
H5a	CSR committee has a positive and significant effect on carbon emission disclosure.	Supported
H5b	CSR committee has a positive and significant effect on carbon performance.	Supported
H6	Board size strengthens the effect of carbon emission disclosure on carbon performance.	Supported
H7	Board independence strengthens the effect of carbon emission disclosure on carbon performance.	Not supported (negative)
H8	Gender diversity strengthens the effect of carbon emission disclosure on carbon performance.	Supported
H9	Foreign ownership strengthens the effect of carbon emission disclosure on carbon performance.	Supported
H10	CSR committee strengthens the effect of carbon emission disclosure on carbon performance.	Supported

, clearly illustrating which hypotheses were supported and which were not.

4.3. Discussion

4.3.1. Board Size Analysis

As hypothesized in H1a and H1b, board size was found to have a positive and significant effect on carbon emission disclosure and carbon performance. A larger board size enables directors to adopt a broader perspective in ensuring information transparency to stakeholders (Nasih et al., 2019). Moreover, a larger board tends to bring together individuals with diverse knowledge and skills, which is particularly beneficial in addressing climate-related challenges (Bedi & Singh, 2024b). The support from a more extensive board structure facilitates the formulation of clearer and more accountable environmental policies, thereby reinforcing the organization’s commitment to environmental responsibility, particularly in reducing carbon emissions (de Villiers et al., 2011). Consequently, this enhances the legitimacy of the company. These findings are consistent with prior studies that have shown a positive correlation between larger board sizes and carbon emission disclosure (Chakraborty & Dey, 2023; He et al., 2019; Toukabri & Mohamed Youssef, 2023) as well as carbon performance (Mehedi et al., 2024).

4.3.2. Board Independence Analysis

Contrary to hypotheses H2a and H2b, board independence demonstrated a negative correlation with carbon performance and carbon emission disclosure. This result might be due to increased communication complexity and slower decision-making processes in companies with highly independent boards. In contrast, smaller boards might find it easier to communicate and make decisions effectively. Additionally, independent directors may avoid engaging in risky initiatives that could potentially damage their reputations (Bansal et al., 2018). Independent boards may also prioritize shareholder interests, focusing more on financial outcomes rather than non-financial aspects such as environmental performance. These empirical findings are consistent with previous studies reporting similar outcomes (Bansal et al., 2018). However, they contradicted other research that found a positive correlation between board independence and carbon emission disclosure and carbon performance (Bui et al., 2020; Kılıç & Kuzey, 2019; Mehedi et al., 2024; Riantono & Sunarto, 2022).

4.3.3. Board Gender Diversity

The findings for H3a and H3b were found to be consistent with the initial hypotheses. As the proportion of women on corporate boards increases, so does the company’s attention to environmental issues, particularly carbon emissions (Konadu et al., 2022). This study confirmed that greater female representation on boards contributed positively to carbon emission disclosure and carbon performance. This outcome is attributed to women’s heightened awareness and concern for sustainability and environmental issues (Shinbrot et al., 2019). Furthermore, this finding aligns with the fifth and thirteenth SDGs, which emphasize gender equality and climate action, respectively. Hence, gender diversity on corporate boards plays a crucial role in influencing environmentally conscious decision-making, demonstrating an organization’s commitment to sustainability (Jizi, 2017). The results of this study reinforce the notion that gender diversity significantly affects both carbon emission disclosure (Elsayih et al., 2018; Ezekiel et al., 2024; Saraswati et al., 2021) and carbon performance (Elsayih et al., 2021).

4.3.4. Foreign Ownership Analysis

Foreign share ownership enables individuals or entities from abroad to hold a portion of a company’s shares. These foreign shareholders often introduce strategies and policies that differ from those of domestic investors (Goyer & Jung, 2011). In particular, they tend to exercise stricter oversight, especially concerning sustainability practices. The findings of this study support this notion, demonstrating that a high level of foreign ownership had a positive effect on carbon emission disclosure (H4a) and carbon performance (H3b). This effect could be attributed to foreign investors’ advanced knowledge and experience from their home countries, where sustainability regulations and practices are often more developed than in Indonesia. The transfer of such knowledge and experience can encourage company management to meet the expectations of various stakeholders, not only in terms of financial performance but also corporate credibility. Consequently, pressure from foreign investors can enhance the disclosure of emissions information, thereby contributing to the achievement of SDGs. The empirical results of this study are consistent with prior research (Bedi & Singh, 2024a; Kim et al., 2021; McGuinness et al., 2017; Park et al., 2023).

4.3.5. CSR Committee

This study found that the presence of a CSR committee within a company’s board contributed positively to information transparency and environmental performance, particularly regarding carbon emissions. These findings were found to be consistent with hypotheses H5a and H5b. The CSR committee is specifically tasked with addressing sustainability issues, allowing it to effectively promote corporate sustainability. Moreover, the committee plays a central role in formulating strategies and policies for environmentally responsible practices, enabling the company to meet the expectations of a wide range of stakeholders. Through the implementation of these strategies, companies are better positioned to reduce their carbon emissions. The CSR committee is also responsible for communicating sustainability-related information in an accountable and transparent manner to stakeholders. These findings align with those of previous studies (Bedi & Singh, 2024b; Elsayih et al., 2021; Liao et al., 2015; Zhu et al., 2024).

4.3.6. Corporate Governance

A larger board of directors can enhance the effect of carbon emission disclosure on carbon performance. This finding supports resource dependence theory, which posits that a company’s board typically comprises individuals with diverse knowledge, experience, and expertise. This diversity facilitates a broader exchange of ideas and a deeper understanding of sustainability issues, including the implications of carbon emission disclosure for carbon performance. Moreover, a larger board is expected to better represent the interests of various stakeholders who demand transparency regarding carbon emissions. In this way, corporate principles are more likely to align with societal values that favor environmentally responsible operations.

The interaction term CED*BIND demonstrated a negative coefficient, indicating that board independence weakened the effect of CED on CP. This outcome might stem from independent board members lacking backgrounds in sustainability, which limited their ability to supervise environmental initiatives, particularly those related to carbon emissions. Furthermore, independent directors may prioritize short-term financial performance, while carbon emission reduction, management, and disclosure are inherently long-term investments.

The presence of women on the board has been shown to strengthen the correlation between CED and CP. Women’s stakeholder-oriented nature and heightened environmental concern contribute to more comprehensive disclosure of carbon emissions, ultimately leading to improved carbon performance. This, in turn, enhances the company’s legitimacy and reputation within the community.

The findings also reveal that foreign ownership strengthens the effect of CED on CP. Foreign shareholders, typically from developed countries, often bring advanced knowledge and experience in corporate sustainability practices. Their involvement may increase pressure on firms to adopt environmentally friendly strategies, as reflected in more extensive carbon emission disclosures in sustainability reports. Transparent disclosure can also mitigate agency problems, such as information asymmetry between shareholders and management. Improved transparency regarding carbon emissions contributes to enhanced carbon performance and signals a proactive response to stakeholder demands.

Additionally, the results support hypothesis H10, indicating that the presence of a corporate social responsibility committee (CSR_COM) reinforced the effect of CED on CP. Committee members often possess specialized skills related to sustainability, particularly in carbon emission disclosure. The formation of such committees serves as a response to stakeholder pressure and ensures that sustainability efforts—especially related to carbon disclosure—are more strategic and impactful, ultimately enhancing corporate reputation and financial performance.

Beyond statistical significance, these findings offer meaningful theoretical and practical implications. Theoretically, they reinforce stakeholder theory and resource dependence theory by demonstrating that governance structures enable the alignment of stakeholder interests and provide access to critical sustainability-related resources. The moderating role of corporate governance mechanisms affirms their dual capacity to independently affect environmental disclosure and performance, as well as to convert symbolic disclosure into tangible environmental outcomes.

Practically, these results suggest that companies should regard carbon emission disclosure not merely as a compliance requirement but as a strategic instrument for improving environmental performance and legitimacy. The present study identifies four actionable governance strategies: (1) expanding board size to enhance sustainability insight, (2) promoting gender diversity to reflect multi-stakeholder perspectives, (3) leveraging foreign ownership for access to global best practices, and (4) institutionalizing CSR committees to coordinate focused climate strategies. Furthermore, the study offers valuable guidance for policymakers and regulators in Indonesia and other developing countries. It underscores the necessity of mandating disclosure and fostering institutional governance mechanisms that promote a culture of sustainability. Future ESG frameworks would benefit from integrating qualitative assessments of board structure and sustainability oversight into climate-related disclosures.

5. Recommendations for Future Studies

Although this study provides valuable insights into the role of corporate governance in climate-related disclosure and performance, several avenues remain open for future research. First, the present analysis was limited to non-financial sectors; thus, future investigations could expand the scope to include financial institutions or conduct cross-sectoral comparisons to enable broader generalizations. Second, the carbon performance measure in this study incorporated emissions from Scopes 1, 2, and 3. Future studies could disaggregate these data, with a particular emphasis on Scope 1 emissions, which directly reflect a company’s operational environmental impact. Third, while this study has conducted standard robustness checks—such as assessments of multicollinearity, heteroskedasticity, and the Hausman test for model specification—it acknowledges the absence of advanced causal inference techniques, such as endogeneity tests or instrumental variable (IV) regression. This limitation is primarily due to the unavailability of suitable instruments within the context of Indonesian reporting. Therefore, future research is encouraged to address endogeneity concerns and apply IV-based methods to enhance causal interpretations. Moreover, although this study focused on the moderating role of corporate governance in the correlation between climate-related environmental disclosure (CED) and carbon performance (CP), future work could explore the interaction effects among governance dimensions (e.g., board size × board gender diversity or board independence × CSR committee) to uncover deeper institutional dynamics affecting sustainability outcomes.

Finally, future research is recommended to undertake cross-country comparative studies, particularly within ASEAN or other emerging economies. Such analyses would help determine whether governance mechanisms affect carbon transparency similarly across diverse institutional or regulatory settings, thereby generating insights with broader applicability to regions pursuing Sustainable Development Goal 13 (Climate Action).

6. Conclusions

Achieving the 2030 SDGs presents substantial challenges for both developed and emerging economies. As the largest contributor to Indonesia’s GDP, the manufacturing sector plays a central role in carbon emissions and, consequently, in the pursuit of SDG 13 (Climate Action). This study examined 150 non-financial firms listed on the Indonesia Stock Exchange (IDX) from 2016 to 2022, employing panel data analysis and drawing on multiple theoretical frameworks—including stakeholder, legitimacy, agency, and resource dependence theories—to investigate how corporate governance affects carbon disclosure and performance, including its moderating role in this correlation. Empirical evidence indicates that specific governance attributes—such as board size, board gender diversity, foreign ownership, and the presence of a CSR committee—have a positive effect on carbon emission disclosure and carbon performance. Furthermore, these governance characteristics could enhance the effectiveness of disclosure by moderating its effect on performance. This finding supports the notion that strong corporate governance can transform symbolic transparency into substantive environmental outcomes. However, board independence was found to have either a negative or insignificant effect, suggesting that certain governance structures might be insufficient to drive environmental progress in emerging markets.

Despite these findings, the study revealed that climate-related disclosure among Indonesian non-financial firms remained relatively low, with an average disclosure level of only 27.8% and a carbon performance score of 6.6%. This situation indicates a general lack of awareness or incentives, which was further compounded by the absence of mandatory reporting regulations. In light of these results, the study offers several practical recommendations. Policymakers should consider strengthening regulatory frameworks by mandating carbon disclosure as part of corporate reporting standards. Clear guidelines and robust enforcement mechanisms would reduce inconsistencies and improve transparency across firms. Furthermore, corporate governance regulations should promote the inclusion of board members with ESG expertise—particularly in independent board roles—to ensure effective sustainability oversight. Regulators may also consider introducing incentives or requirements for the establishment of sustainability or CSR committees, thereby institutionalizing environmental accountability. This study has practical implications for policymakers, emphasizing the importance of reinforcing governance structures—particularly the role of CSR committees and board diversity—in institutionalizing sustainability reporting. For firms, the findings highlight the strategic value of climate disclosure, not merely as a compliance measure but as a means to enhance legitimacy and operational performance. For future researchers, the study underscores the need to explore causal mechanisms and interaction effects to deepen our understanding of corporate sustainability governance.