PLANET OR PROFIT? THE EFFECT OF CARBON EMISSION DISCLOSURE AND CARBON TAX ON FINANCIAL PERFORMANCE: EVIDENCE FROM INDONESIA’S GREEN STOCK INDEX

Abstract

Today is the era when sustainability has become an important part of business strategy, and companies are expected to demonstrate environmental responsibility without sacrificing financial performance. This study examines the impact of carbon emission disclosure and carbon tax on financial performance using data from companies listed in the 2023 SRI-KEHATI Index, which is a green stock index, which generally already has an emission and energy efficiency strategy. The measurement of financial performance is based on Return on Assets (ROA), while carbon emission disclosure is assessed based on the GRI 305 disclosure score. A quantitative approach was applied by analyzing cross-sectional data from 24 Indonesian companies that have committed to social and environmental responsibility. To perform the analysis, multiple linear regression was applied in this study. It was found that carbon emission disclosure positively and significantly affected financial performance, indicating that transparent environmental reporting can increase public and stakeholder trust, as well as provide financial benefits. In contrast, the carbon tax variable did not have a significant effect on ROA. These findings emphasize the importance of integrating sustainability strategies into corporate management, especially in emerging markets.