Profitability and Firm Size in ESG Disclosure: A Conceptual Review of Indonesia’s Energy Sector

Cinta Myesa Inditamara Sicca, Nanda Wahyu Indah Kirana

Abstract


Environmental, Social, and Governance (ESG) disclosure has become increasingly important in Indonesia’s energy sector as companies face growing expectations for transparency from investors, regulators, creditors, communities, and other stakeholders. Financial characteristics, particularly profitability and firm size, may influence a firm’s ability and incentives to respond to these stakeholder expectations. Previous studies generally report positive relationships between profitability and firm size and ESG disclosure, although the strength of these relationships varies across industries and institutional contexts. This study aims to conceptually examine the relationship between profitability, firm size, and ESG disclosure in Indonesia’s energy sector through the perspective of Stakeholder Theory. This study employs a conceptual literature review by synthesizing theoretical perspectives, previous empirical studies, sustainability reporting frameworks, and relevant developments in Indonesia’s sustainability reporting environment. The conceptual synthesis indicates that profitability tends to support ESG disclosure through greater financial capacity and organizational resources, while firm size encourages broader disclosure through greater stakeholder visibility, external scrutiny, and reporting capacity. This study contributes an integrated conceptual framework that explains the relationship between financial characteristics and ESG disclosure through two stakeholder-related mechanisms: financial capacity and stakeholder visibility. The framework provides a conceptual basis for future empirical research on ESG disclosure among energy-sector companies in Indonesia.

Keywords


ESG Disclosure; Profitability; Firm Size; Leverage; Stakeholder Theory; Conceptual Review; Energy Sector

Full Text:

Download PDF

References


Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052–5079. https://doi.org/10.1007/s10668-021-01649-w

Aulia, A., Lastari, A. W., & Dillak, V. (2025). Enhancing ESG Disclosure: The Role of Profitability, Financial Slack, and Board Gender Diversity in Indonesian and Malaysian Banks Sector. GREENOMIKA, 7(1), 67–77. https://doi.org/10.55732/unu.gnk.2025.07.1.7

Borghesi, S., Costantini, V., D’Amato, A., Dibattista, I., Koundouri, P., Li, Q., Mazzarano, M., Sterner, T., Tiwari, M. M., Vis, P., & Xepapadeas, A. (2025). Reforming ESG: a European and Global South perspective. Environment and Development Economics, 30(4), 282–296. https://doi.org/10.1017/S1355770X24000366

Busch, T., Bassen, A., Lewandowski, S., & Sump, F. (2022). Corporate Carbon and Financial Performance Revisited. Organization & Environment, 35(1), 154–171. https://doi.org/10.1177/1086026620935638

EIA. (2025). Brent crude oil prices traded in a narrow range in 2024. U.S. Energy Information Administration. https://www.eia.gov/todayinenergy/detail.php?id=64144

Freeman, R. E., Dmytriyev, S. D., & Phillips, R. A. (2021). Stakeholder Theory and the Resource-Based View of the Firm. Journal of Management, 47(7), 1757–1770. https://doi.org/10.1177/0149206321993576

Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917

Gati, V., Harymawan, I., & Nasih, M. (2024). Indonesia Shariah Stock Index (ISSI) firms and environmental, social, and governance (ESG) disclosure in Indonesia. Journal of Islamic Accounting and Business Research, 17(2), 346–361. https://doi.org/10.1108/JIABR-12-2022-0354

Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 101889. https://doi.org/10.1016/j.jcorpfin.2021.101889

GRI. (2021). GRI 1: Foundation 2021 (or Consolidated Set of the GRI Standards 2021). https://www.globalreporting.org/standards/download-the-standards/

IDX. (2023). Indonesia Carbon Exchange (IDXCarbon).

IEA. (2023). World Energy Outlook 2023. https://www.iea.org/reports/world-energy-outlook-2023

IEA. (2024a). CO₂ Emissions in 2023.

IEA. (2024b). Southeast Asia Energy Outlook 2024. https://www.iea.org/reports/southeast-asia-energy-outlook-2024

IPCC. (2023). Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. https://www.ipcc.ch/report/ar6/syr/

IRENA. (2023). World Energy Transitions Outlook 2023: 1.5°C Pathway. https://www.irena.org/publications/2023/Jun/World-Energy-Transitions-Outlook-2023

Itan, I., Sylvia, S., Septiany, S., & Chen, R. (2025). The influence of environmental, social, and governance disclosure on market reaction: evidence from emerging markets. Discover Sustainability, 6(1), 347. https://doi.org/10.1007/s43621-025-01085-0

KPMG. (2024). Survey of Sustainability Reporting. https://kpmg.com/xx/en/our-insights/esg/the-move-to-mandatory-reporting.html

OJK. (2021). Sustainable Finance Roadmap Phase II (2021–2025). https://keuanganberkelanjutan.ojk.go.id/

OJK. (2023). Climate Risk related guidelines.

Rahmah, N. A., Purwohedi, U., & Handarini, D. (2024). The Moderating Role of Profitability and Firm Size in ESG Disclosure Towards Firm Value. International Journal Of Education, Social Studies, And Management (IJESSM), 4(2), 700–719. https://doi.org/10.52121/ijessm.v4i2.345

Sekaran, & Bougie. (2020). Research Methods for Business: A Skill-Building Approach (8th ed.). John Wiley & Sons.

Statista. (2026). WTI and Brent crude oil annual spot prices 2025. . https://www.statista.com/statistics/209641/average-annual-spot-price-of-wti-and-brent-crude-oil/

Wang, N., Pan, H., Feng, Y., & Du, S. (2024). How do ESG practices create value for businesses? Research review and prospects. Sustainability Accounting, Management and Policy Journal, 15(5), 1155–1177. https://doi.org/10.1108/SAMPJ-12-2021-0515

Wijaya, J. R. T., & Herwiyanti, E. (2024). Extent of ESG disclosure for energy sector companies: ESG reporting guide 2.0 Nasdaq. Jurnal Akademi Akuntansi, 7(4), 523–536. https://doi.org/10.22219/jaa.v7i4.30345

World Bank. (2023). Climate Finance and Energy Transition Report. openknowledge.worldbank.org

Xia, Z., Sun, A., Cai, X., & Zeng, S. (2025). Analyzing corporate ESG reporting through data mining: evolutionary trends and strategic model. Journal of Management Analytics, 12(4), 634–664. https://doi.org/10.1080/23270012.2025.2563507

Zahid, Adil Saleem, & Umer Sahil Maqsood. (2023). ESG performance, capital financing decisions, and audit quality: empirical evidence from Chinese state owned enterprises. https://doi.org/https://doi.org/10.1007/s11356-022-24445-6


Refbacks

  • There are currently no refbacks.


Committee:

[email protected]

  • Dr. Syaharuddin : +62 878-6400-3847
  • Dr. Intan Dwi Hastuti : +62 812-1611-9880