THE EFFECT OF CARBON EMISSION DISCLOSURE AND GREEN INNOVATION ON FINANCIAL PERFORMANCE (ENERGY AND CONSUMER NON-CYCLICAL COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE)

Authors: Nadya Syafitri, Lia Uzliawati & Bustanul Arifin

ABSTRACT

The issues of sustainability and environmental responsibility have become increasingly relevant in evaluating corporate performance, especially in emerging markets. This study aims to examine the effect of carbon emission disclosure and green innovation on financial performance. The research uses a quantitative approach with purposive sampling of energy and consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange (IDX) during 2021–2023. Multiple regression analysis was conducted using SPSS. The results show that carbon emission disclosure has a significant negative effect on financial performance, suggesting that environmental transparency without concrete actions, such as improving emission performance or enhancing process efficiency may be interpreted as an environmental risk by investors. Meanwhile, green innovation proxied by green process innovation positively and significantly affects financial performance, indicating that visible and efficiency-driven environmental actions are appreciated by the market. Conversely, green product innovation has no significant effect, likely due to low consumer and investor awareness or willingness to support green products in developing markets such as Indonesia. These findings imply that while operational environmental innovations can help improve financial performance, carbon disclosures must be accompanied by concrete performance, and product-level innovation still faces cultural and economic challenges in Indonesia’s market context.

Keywords: Financial Performance, Carbon Emission Disclosure, Green Innovation

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