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Finance, Accounting and Business Analysis 
Volume 5 Issue 2, 2023 

http://faba.bg/       
ISSN  2603-5324 

 

Environmental Accounting and its Impact to Firm Value: Study of 

Environmentally Sensitive Companies in Indonesia 

 

Diajeng Fitri Wulan1* , Reni Oktavia2, Usep Syaipudin3, Adilah Sabrina Muti’ah4 
Accounting Department, University of Lampung, Indonesia1 

Accounting Department, University of Lampung, Indonesia2 

Accounting Department, University of Lampung, Indonesia3 

Accounting Department, University of Lampung, Indonesia 4 

* Corresponding author 

 

 

Info Articles   Abstract 

 

History Article: 
Submitted 28 August 2023 

Revised  29 November 2023 
Accepted 9 December 2023  

 

 Purpose: This research aims to explore more about the escalating 

investor interest in environmental risks and their recognition of a 

company's environmental performance as pivotal to its long-term 

viability.  

Design/Methodology/Approach: Utilizing multiple regression 

analysis, we investigate the influence of environmental cost, eco-

efficiency, corporate social responsibility (CSR), and environmental 

performance on a company's value.  

Originality: The originality and value of this research lie in its 

exploration of the increasing investor interest in environmental 

considerations and their recognition of a company's environmental 

performance as a key determinant of its long-term viability.  

Findings: Our findings reveal a positive impact of these factors on 

overall company value, suggesting that improvements in environmental 

performance, eco-efficiency, and transparent reporting of environmental 

expenses and CSR contribute significantly to a firm's market valuation.  

Practical Implication: This underscores the critical role of open and 

honest communication about environmental practices in attracting 

investors and enhancing a company's market standing. The company 

should highlight the importance of integrating environmentally 

responsible practices into business strategies for sustained success and 

investor appeal.   

Limitation and suggestion: Notably, the study is limited to 

environmentally conscious businesses, signaling the necessity for future 

research to broaden its scope for a more comprehensive evaluation of 

these relationships across diverse industries. 

Paper Type: Research Paper 
 

 

Keywords:  

Firm Value, 

Environmental Cost, Eco-

efficiency, CSR, 

Environmental 

Performance 
 

 

JEL: M41, Q56, G32.  

   
* Address Correspondence:   

E-mail : diajengfitriw@gmail.com1  

renioktavia@gmail.com2 

usepsyaipudin@gmail.com3  
adilahsabrinamutiah08@gmail.com4  

 

 

mailto:diajengfitriw@gmail.com
mailto:renioktavia@gmail.com2
mailto:usepsyaipudin@gmail.com3
mailto:adilahsabrinamutiah08@gmail.com
https://orcid.org/0000-0002-6450-6356


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INTRODUCTION 

 

Recently, there has been a noticeable surge in investor attention and recognition of the potential risks 

associated with environmental problems and other non-financial considerations such as social responsibility 

and effective corporate governance. This circumstance compels organizations to intensify their endeavors 

and prioritize the non-financial dimensions of company success that are closely associated with company 

worth. Based on the findings of (Aydoğmuş et al. 2022; Benkraiem et al. 2023; Cahyani and Mayangsari 

2022; Yousaf 2021), there is a growing expectation among various stakeholders, including investors, 

employees, suppliers, customers, and the government, for enterprises to prioritize and evaluate their 

performance in terms of both financial and non-financial aspects. Consequently, numerous organizations 

seek to adopt ethical and sustainable business practices with a long-term outlook, emphasizing the 

integration of environmental, governance, social, and community considerations (Sugianto et al. 2022). 

According to (Felisha and Rossieta 2018; Schneider 2008), companies that exhibit subpar 

environmental performance are often perceived as precarious and are unlikely to sustain themselves in the 

long run. The presence of these erroneous beliefs and unrealistic expectations will have a detrimental impact 

on the overall worth of the organization. In light of significant public scrutiny and demanding market 

expectations, organizations must carefully deliberate strategies to effectively address market demands (Li et 

al. 2020). This entails the provision of advantageous outcomes while concurrently ensuring the sustainable 

preservation of the environment. Based on the findings of (Abdi et al. 2020), it can be observed that investors 

exhibit a significant degree of sensitivity toward companies' ability to meet their obligations to stakeholders, 

particularly regarding the sustainability of the company. It is widely anticipated that firms, particularly those 

that are publicly traded, should take into account strategies related to environmental conservation and 

implement practices and initiatives aimed at enhancing their environmental performance (Abdelhalim et al. 

2023; Jabbour et al. 2018; Shen and Chen 2020). 

According to (Nguyen et al. 2021), legitimacy theory posits that corporations demonstrate a 

commitment to environmentally responsible practices to satisfy the demands of company stakeholders and 

align with societal norms and interests. Moreover, the concept of legitimacy theory, as discussed by (Liao et 

al. 2015), posits that a firm's dedication to enhanced environmental accountability has the potential to bolster 

its legitimacy and corporate image by fostering positive business associations with external stakeholders. In 

order to fulfill the expectations of a company's stakeholders, organizations have the option to implement 

environmental-based accounting practices as a means of attaining favorable environmental performance 

(Okafor, 2018). Environmental accounting is utilized to attain sustainable development, foster positive 

community relations, and execute environmental conservation efforts in a successful and efficient manner. 

Accounting professionals face the task of allocating expenses in a manner that aligns with societal norms 

and interests. Consequently, the significance of environmental reporting and accounting has become 

increasingly pronounced in recent years (Bassey et al. 2013; Riyadh et al. 2020). Environmental accounting 

promotes improved corporate management by emphasizing the consideration of many stakeholders' 

interests, primarily focusing on assessing the environmental consequences of managerial actions. The 

necessity for government assistance in enhancing the environmental performance of the enterprise, which is 

intricately linked to the community, is substantiated. The current administration in Indonesia has 

implemented a green economy, also known as a green economy, as a plan for economic change. The concept 

of a green economy refers to an economic state that aims to uphold a harmonious equilibrium between the 

welfare of society and the preservation of the environment (Dewi et al. 2023). 

Establishing a green economy in Indonesia is underpinned by several legal frameworks, including 

POJK 51/POJK.03/2017, which pertains to the execution of sustainable finance for financial institutions, 

issuers, and public companies. Additionally, OJK Circular No. 16/SEOJK.04/2021 has been introduced to 

amend Financial Services Authority Regulation Number 57/POJK.04/2020, which addresses securities 

offerings through crowdfunding services based on information technology. The Otoritas Jasa Keuangan 

(OJK), as the regulatory body overseeing the implementation of the capital market in Indonesia, has 

established a set of strategic plans to promote corporate sustainability. These plans are outlined in the 

Roadmap for Sustainable Finance in Indonesia (2015-2019) and further developed in the Roadmap for 

Sustainable Finance in Indonesia Phase II (2021-2025). Implementing green economy principles will 

enhance the company's environmental performance and influence its perceived value among the general 

public. The trust and satisfaction of the general public towards firm products are contingent upon their 

favorable environmental performance. The adverse environmental performance will have implications for 

individuals who opt to abstain from utilizing products deemed environmentally unfriendly and capable of 

causing harm to ecosystems (Aini and Faisal 2021). Subsequently, this endeavor in environmental 

management represents one of the company's measures of responsibility aimed at garnering stakeholder 

support to generate a favorable influence on enhancing firm value (Kim et al. 2021; Septianingrum 2022). 

Prior research has been undertaken to examine the impact of different corporate environmental 



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initiatives on the valuation of firms. Several studies have examined the relationship between a company's 

environmental performance and value. (Chouaibi et al. 2022) conducted research in the UK and Germany, 

while (Kim et al. 2021) conducted a similar study in Korea. (Agyemang et al. 2021) focused on China, and 

(Shabbir and Wisdom 2020) conducted their research in Nigeria. These studies collectively suggest a positive 

association between a company's environmental performance and value. Additionally, research conducted 

in Indonesia by (Ermaya and Mashuri 2020; Harahap et al. 2019; Utomo et al. 2020; Wahidawati and Ardini 

2021) also support this finding. Contrary to the findings of previous studies (Aini and Faisal 2021; Fahad 

and Busru 2021), it is evident that various factors may contribute to this discrepancy. These factors 

encompass the absence of proactive initiatives by companies about environmental and social endeavors, the 

dearth of a sustainable investment culture among investors, and a lack of consumer sensitivity and awareness 

regarding corporate social responsibility practices. 

Several other studies also examine the environmental costs associated with implementing corporate 

environmental accounting. Environmental costs are utilized by companies as financial resources to 

implement a range of programs and initiatives focused on the environment to benefit the community. The 

study conducted by (Hapsari and Kurniawan 2020; Nababan and Hasyir 2019) revealed a favorable 

correlation between environmental expenses and corporate value and performance. Contrarily, alternative 

studies done by (Okafor 2018; Siagian 2021) yielded contrasting results, as they observed that heightened 

environmental expenses had a detrimental impact on the organization's financial performance, leading to 

an escalation in expenditure items. 

The company's eco-efficiency can provide further insights into its environmental endeavors, 

encompassing environmental performance and costs and other initiatives undertaken in this domain. The 

concept of eco-efficiency underscores a company's capacity to meet consumer demands while 

simultaneously reducing the environmental impact of its production processes and addressing stakeholder 

and governmental pressures (Abdelhalim et al. 2023; Vásquez et al. 2019). The study conducted by (Safitri 

and Nani 2021; Yao et al. 2019) revealed a positive correlation between eco-efficiency and company value. 

This relationship is attributed to the gradual reduction of environmental impact and conservation of natural 

resources while producing goods and services. As a result, the enhanced eco-efficiency positively influences 

the perception of the company's value in the public domain. However, contrasting findings were presented 

by (Abdelhalim et al. 2023; Septianingrum 2022). 

Corporate Social Responsibility (CSR) can serve as a strategic initiative for companies to actively 

engage with the community, thereby enhancing their corporate image. Corporate Social Responsibility 

(CSR) refers to the practice undertaken by companies to effectively communicate their obligations and duties 

to various stakeholders (Ikram et al., 2019). Previous studies conducted by (Cahyani and Mayangsari 2022; 

Gerged et al. 2021) have demonstrated a positive relationship between Corporate Social Responsibility 

(CSR) and company value. These studies have shown that CSR indicates a company's commitment to 

societal welfare, employee well-being, and environmental sustainability, thereby fulfilling its social 

obligations. However, contrasting findings have been reported by (Fahad and Busru, 2021; Kraus et al. 

2020), who attribute the differing results to investor backgrounds and preferences variations. 

Environmental innovation refers to a company's collective endeavor to enhance the quality and 

sustainability of current products and processes. This is achieved by adopting environmentally conscious 

practices such as the utilization of eco-friendly raw materials, waste reduction, incorporation of 

environmentally friendly design principles in product development, mitigation of carbon emissions, and 

minimizing the consumption of water, electricity, and other essential resources (Rehman et al. 2021). 

Environmental innovation has a significant role in preserving resources, safeguarding the environment, and 

fostering financial prosperity. According to (Chouaibi et al. 2022), implementing environmental innovation 

is a proactive approach to attaining the advantages of sustainable environmental development. The potential 

of environmental innovation to enhance a company's environmental initiatives and enhance its corporate 

value has been identified in various studies. (Novitasari and Agustia 2021) researched this topic in Indonesia, 

while (Guo et al. 2020; Li et al. 2020) explored it in China. (Kraus et al. 2020) investigated the relationship 

between environmental innovation and corporate value in Malaysia, and (Andries and Stephan 2019) 

examined it in Belgium. 

The main objective of our research is to assess the impact of environmental initiatives on the market 

value of environmentally sensitive companies listed on the Indonesia Stock Exchange (IDX). With a 

growing investor focus on environmental considerations and non-financial aspects such as social 

responsibility and corporate governance, our study seeks to investigate the relationship between 

environmental performance, eco-efficiency, corporate social responsibility (CSR), and environmental 

innovation on the market value of these companies. Employing a robust methodology, we employ multiple 

regression analysis to analyze the quantitative associations between the aforementioned environmental 

factors and the market valuation of companies in the IDX. By focusing on environmentally sensitive firms, 

we aim to provide insights into the financial implications of their environmental practices, offering valuable 



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information for investors, policymakers, and company stakeholders. This research is expected to contribute 

valuable insights into the financial implications of environmentally responsible practices, assisting investors, 

policymakers, and stakeholders in making informed decisions and fostering sustainable business practices. 

 

 

LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK  

 

Legitimacy Theory 

Legitimacy Theory refers to the perspective that organizations seek to establish and maintain 

legitimacy in the eyes of their stakeholders. The concept of legitimacy theory elucidates the reciprocal 

relationship, known as the social contract, between firms and the broader general public (Chen and Roberts 

2010). Legitimacy can be regarded as a possible advantage or resource that enables a corporation to endure 

and thrive (Dowling and Pfeffer 1975). The social contract allows firms to align their actions with societal 

norms and values. Assessing a company's environmental performance is a strategic mechanism employed 

to acquire and uphold the company's legitimacy among various stakeholders (Ifada et al. 2021; Kuzey and 

Uyar 2017). In order to safeguard their interests, corporations must align their operations with societal 

demands and expectations. The Legitimacy Theory posits that corporations must undertake various actions 

to fulfill public expectations and ensure their long-term viability. 

 

Firm Values 
The concept of firm values refers to the guiding principles and beliefs that shape an organization's 

behavior and decision-making processes. The correlation between the company's value and the level of 

interest in its social and environmental performance has been highlighted in previous research (Jo et al. 

2016). The value of a company is determined by the performance of the company, as indicated by the share 

price that is influenced by the forces of supply and demand in the stock market. This share price indicates 

the public's evaluation of the company's performance (Aini and Faisal 2021; Harmono 2022). The 

significance of firm value lies in its impact on enterprises and their owners, as a higher firm value corresponds 

to increased profits for shareholders. The valuation of a firm is a reflection of its operational performance 

and future growth potential, which in turn generates investor interest due to its strong performance. 

Companies that embrace stringent global environmental regulations exhibit a significantly elevated market 

worth. Enhanced environmental performance has the potential to augment the value of a company due to 

its ability to mitigate compliance expenses, produce tax advantages, diminish the likelihood of 

environmental litigation, and, more broadly, cultivate a corporate reputation aligned with prevailing 

regulatory frameworks (Habib and Bhuiyan 2017; Kim et al. 2021). Organizations that have implemented 

environmental accounting practices have gained more legitimacy among their stakeholders, enhancing their 

ability to access diverse resources, including securing reduced capital costs or tax exemptions (Gerged et al. 

2021; Ntim 2016). 

 

Environmental Cost and firm value 
The environmental costs encompass the company's internal and external expenses, and all incurred 

costs are directly associated with environmental harm or conservation efforts (Nababan and Hasyir 2019). 

Typically, these costs arise due to non-compliance with environmental requirements, resulting in 

substandard environmental conditions (Ladyve 2020). They encompass a spectrum of organizational 

expenses related to environmental management, including prevention, planning, expenditures, and 

remediation of damages. Typically, these expenses encompass the expenditures organizations incur 

regarding environmental management, including those associated with prevention, expenditure, planning, 

and remediation of damages. Companies have the potential to mitigate environmental failures by allocating 

more excellent resources toward preventive and detection efforts via the implementation of robust 

environmental management systems. In order to maintain operational efficiency and long-term viability, 

companies must allocate resources towards capital and expenses, which are encompassed within the 

environmental cost component or corporate social responsibility (CSR). According to (Meiyana and Aisyah 

2019), corporations can enhance their corporate performance by effectively and judiciously allocating 

environmental expenditures. This necessitates a substantial financial investment, but the returns are 

enduring and yield lasting benefits for the organization. Enhancing performance necessitates a substantial 

financial investment; nonetheless, this endeavor will yield enduring and permanent advantages for the 

organization. The allocation of environmental expenses owned by a company has been found to have a 

positive effect on corporate performance, hence influencing the company's overall value (Hapsari and 

Kurniawan 2020; Nababan and Hasyir 2019; Okafor 2018). This implies that companies dedicating 

resources to environmental management not only comply with regulations and ethical standards but also 

position themselves for sustained success and increased market value. 



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H1: There is a positive influence of environmental costs on firm value 

 
Environmental performance and firm values 

Environmental performance refers to a company's capacity to incorporate its commitment to 

environmental activities and operations proactively. According to (Siagian 2021), a positive correlation 

exists between a company's level of involvement in environmental initiatives and its perceived reputation 

among stakeholders. Environmental performance refers to the extent to which a corporation engages in 

activities to preserve and safeguard the natural environment, particularly within the geographical context of 

its operations (Dewi et al. 2023). The present study assessed the environmental performance by utilizing the 

Pollution Control, Evaluation, and Rating Program (PROPER) established by the Indonesian Ministry of 

Environment. This investigation draws upon the research completed by (Cahyani and Mayangsari 2022; 

Ifada et al. 2021; Novitasari and Agustia 2021). The primary objective of the PROPER program is to 

promote and strengthen the firm's involvement in environmental management. This process involves 

assessing each company's operational facilities and evaluating their adherence to established environmental 

standards (Sarumpaet 2005). 

Those that exhibit solid environmental performance are more likely to provide comprehensive and 

transparent disclosures regarding the amount and quality of their environmental impact, in contrast to those 

that demonstrate weak environmental performance. The impact of environmental performance on business 

value is beneficial. Companies with strong environmental performance are more likely to provide 

comprehensive and transparent disclosures about their environmental impact compared to those with weak 

performance. The increasing number of firms engaging in environmentally-focused initiatives and 

demonstrating a solid commitment to social responsibility has led to heightened awareness within the 

community regarding the extent of their contributions to the environment. Hence, it can be inferred that 

there exists a positive correlation between a company's environmental performance and its societal value, as 

supported by the studies conducted by (Chouaibi et al. 2022; Safitri and Nani 2021; Yao et al. 2019). These 

studies provide empirical evidence supporting the idea that companies with strong environmental 

performance not only enhance their reputation but also contribute positively to their overall societal value. 

H2: There is a positive influence of environmental performance on firm value 

 
Eco-Efficiency and firm value 

As to the Ministry of Environment of the Republic of Indonesia, Eco-Efficiency is a conceptual 

framework that encompasses optimizing natural resources, energy utilization, and production processes to 

minimize the consumption of raw materials, water, and environmental impact. The concept of eco-efficiency 

entails the integration of assessments of environmental sustainability into organizational plans and 

operations, driven by the influence of stakeholders and governmental entities (Rehman et al. 2021; Shao et 

al. 2019). Organizations must actively oversee and uphold Eco-Efficiency within their operational 

frameworks encompassing resource allocation, water and energy consumption, and waste management. 

This commitment is crucial for advancing and enhancing the environmental sustainability performance of 

the company (Abdelhalim et al. 2023); the organizations are required to actively manage various facets of 

their operations, including resource allocation, water and energy consumption, and waste management. The 

commitment to these practices is not merely a compliance measure but is recognized as pivotal for advancing 

and improving a company's environmental sustainability performance.  

Furthermore, effective internal management practices within companies, encompassing informed 

decision-making, standardized procedures, and attention to employee well-being, are intricately linked to 

the successful implementation of environmental management strategies. This implies that companies with 

robust internal management practices are better equipped to navigate the complexities of integrating Eco-

Efficiency principles into their operations. Attention is given to employee comfort, productivity 

performance, and the overall quality of the work environment. Companies with effective managerial 

practices are better positioned to implement environmental management strategies successfully. 

Consequently, the concept of Eco-Efficiency plays a substantial role in influencing the overall performance 

of a company, thereby impacting its market value. Consequently, a positive relationship exists between Eco-

Efficiency and company value, as supported by (Safitri and Nani 2021; Yao et al. 2019). 

H3: There is a positive effect of eco-efficiency on firm value 

 
CSR and firm values 

Corporate Social Responsibility (CSR) is a strategic approach that confers a competitive edge on firms 

by enhancing company performance through a heightened focus on social responsibility (Kowalczyk 2019; 

Newman et al. 2020). Corporate Social Responsibility (CSR) is an essential practice that every corporation 

should do in order to align the company's operations with the values and expectations of the community. 

Implementing Corporate Social Responsibility (CSR) has been found to be beneficial for organizations in 



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generating profits and fostering a greater focus on environmental sustainability, societal well-being, and 

employee welfare (Cahyani and Mayangsari 2022). Moreover, the correlation between the enhancement of 

quality and performance in CSR practices and the acquisition of accounting information from robust 

business processes and effective management practices is crucial. This linkage emphasizes the strategic role 

of accounting information as a valuable resource, empowering stakeholders to make informed and rational 

economic decisions. 

In addition to financial performance, non-financial performance also plays a crucial role in 

determining the value of a firm (Fahad and Busru 2021). When organizations can enhance their social, 

environmental, and corporate governance performance by adhering to corporate social responsibility (CSR) 

values, they have the potential to generate more excellent value for their stakeholders. According to 

(Cahyani and Mayangsari 2022; Gerged et al. 2021), it has been observed that Corporate Social 

Responsibility (CSR) positively impacts the value of firms. The creation of a positive corporate reputation 

through effective CSR implementation is crucial, as suggested by these studies, as it not only benefits society 

but also provides stakeholders with positive signals, influencing decisions in favor of the organization. This 

underscores the strategic value of CSR, indicating that its impact extends beyond financial metrics to 

encompass broader societal impact and the cultivation of positive stakeholder relationships. 

H4: There is a positive influence of CSR on firm value 

 

Research framework  

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Data processed, 2023 

Figure 1. Research framework 

 

 

METHODS 

 

Research type and data 
This type of research is quantitative research. The data used is secondary data, with the data source 

used coming from company sustainability reports which can be accessed from each company's website. 

 

Population and sample 
The population of this empirical research comprises environmentally sensitive companies that are 

part of various indices listed on the Indonesia Stock Exchange (IDX). Specifically, the companies are 

members of the IDX ESG Leaders, IDX LQ45 Low Carbon Leaders, ESG Sector Leaders IDX KEHATI, 

SRIKEHATI, and ESG Quality 45 IDX KEHATI indices for the period from 2018 to 2022. These indices 

are designed to include companies that demonstrate strong environmental, social, and governance (ESG) 

performance.  

The sample selection process employed purposive sampling, with the condition that the selected 

companies are registered on the IDX throughout the specified timeframe (2018 to 2022). Furthermore, these 

companies must have issued comprehensive sustainability reports and disclosed detailed information on 

nominal environmental costs. The selection criteria aim to ensure that the chosen companies have actively 

reported on their environmental practices and financial commitments to environmental sustainability. 

Environmental  
Cost (EC) 

Environmental  
Performance (EP) 

Eco-efficiency 

(EE) 

Corporate Social 

Responsibility 

(CSR) 

Firm Value 



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The final sample for this study comprises 32 companies that meet the specified criteria and are actively 

listed on the IDX. These companies represent a subset of the larger population, allowing for a focused 

analysis of the financial implications of environmental practices within the context of environmentally 

sensitive businesses in the Indonesian stock market. The inclusion of companies from various indices 

provides a diverse representation of industries and sectors with a shared commitment to environmental 

responsibility, contributing to the robustness and relevance of the empirical findings. 

 

Variable measurement  

 

Table 1. Variable measurement 

Variable Definition Measurement 

[Y] Firm value Conditions that have been achieved by a company 

as an illustration of public trust in the company 

after going through the activity process  (Safitri et 

al. 2019). 

Tobin’s Q (Aydoğmuş et al. 

2022; Safitri et al. 2019; 

Septianingrum 2022) 

[X1] 

Environmental 

cost 

Costs incurred internally and externally to the 

company and all costs incurred are related to 

environmental damage and protection (Nababan 

and Hasyir 2019). 

Environmental costs disclosed in 

the sustainability report (Ermaya 

and Mashuri 2020; Ladyve 2020) 

[X2] 

Environmental 

performance 

The company's concrete actions in fulfilling its 

responsibilities towards the environment and 

parties affected by its activities (Dewi et al. 2023). 

PROPER Value (Cahyani and 

Mayangsari 2022; Dewi et al. 

2023; Ermaya and Mashuri 

2020) 

[X3] Corporate 

social 

responsibility 

CSR is an activity in which a company sets aside 

some of its profits for the benefit of humans and the 

environment sustainably based on proper and 

professional procedures (Fersela et al. 2021). 

GRI (Cahyani and Mayangsari 

2022; Fersela et al. 2021; Kholmi 

and Nafiza 2022) 

[X4] Eco-

efficiency 

Eco-efficiency is producing goods and services at 

competitive prices, according to human needs, and 

can provide a good quality of life  (Safitri and Nani 

2021). 

ISO 14001 ownership (Ermaya 

and Mashuri 2020; 

Septianingrum 2022) 

Source: Data processed (2023). 

 

  

RESULT AND DISCUSSION 

 

Data analysis    
Data analysis was used using descriptive analysis, classic assumption test, regression analysis 

(multiple and moderation), and hypothesis testing (coefficient of determination t-test and f-test) using SPSS 

software. 

 

Descriptive statistics 

Table 2. Descriptive statistics result  

Variables Minimum Maximum Mean Std. Deviation 

CSR 0.22 0.97 0.509 0.13419 

Environmental Cost 11.00 257637.00 30213.516 53563.037 

Eco-efficiency 0.00 1.00 0.671 0.471 

Environmental performance 0.00 5.00 1.883 2.063 

Firm value 0.04 2.30 0.753 0.407 

Source: Data processed (2023). 

 

Based on the descriptive tests that have been carried out on 32 companies, several findings were 

found. Chandra Asri Petrochemical Company has the lowest CSR disclosure, namely only making 

disclosures of 22 % or 33 indicators out of 151 in the GRI. This lowest disclosure occurred in 2019, although 

afterward, Chandra Asri Petrochemical increased its disclosures in 2020, 2021, and 2022 by 44 %, 47 %, and 

92 %, respectively. Meanwhile, the company with the most significant disclosure, namely Timah Tbk, in 

2022 made disclosures of 97 % or 146 indicators out of 151 indicators; this figure shows that Timah Tbk has 

increased from year to year after previously being at an average disclosure rate of 65 % to 68 %. 

The environmental costs disclosed by companies in their sustainability reports have various values 



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and ranges, which can be seen from the standard deviation more remarkable than the mean value obtained. 

Bank Jatim disclosed the smallest amount of environmental costs in 2018. However, it will continue to 

increase from 2019 to 2022, and the Indocement Tunggal Prakarsa will disclose the largest in 2022. Eco-

efficiency is measured using ISO 14001, where 10 companies out of 32 companies do not yet have 

international certificates regarding corporate management systems that function to ensure that the processes 

used and the products, they produce fulfill commitments to the environment, especially in efforts to comply 

with regulations in the environmental sector, pollution prevention and commitments to continuous 

improvement. Nearly 30 % of the environmentally sensitive companies observed in this study still needed 

this certification from 2018 to 2022. On the other hand, 22 other companies managed to meet the 

requirements of ISO 14001 and hold this certification. 

For company performance as measured by PROPER, two companies, namely Bank Negara 

Indonesia and Bank Rakyat Indonesia, have won PROPER at the gold level, where gold PROPER is the 

best proper, meaning that the company has implemented environmental management comprehensively and 

continuously. This research also found that 8 companies still needed the PROPER certification from the 

Indonesian Ministry of Environment and Forestry. The smallest company value was owned by the Kalbe 

Farma Tbk company in 2022, and the largest by the Pertamina Gas Negara company with a Tobins'Q value 

of 2.3 or more than 1, which means that asset management is successful and the shares are overvalued 

(Dzahabiyya et al. 2020).  

 

Coefficient of Determination (R2) 

Table 3. Coefficient of Determination result 

Regression Statistics 

Multiple R 0.49637622 

R Square 0.24638935 

Source: Data processed (2023) 

 

The R Square of 0.25 suggests that these independent variables collectively explain approximately 

25% of the variability observed in company value. Specifically, the individual contributions of CSR, 

Environmental Cost, Eco-efficiency, and Environmental Performance are not detailed without the 

coefficients. However, the statistics imply that CSR, along with the other environmental factors, plays a role 

in influencing company value. Further interpretation would necessitate examining the coefficients 

associated with each independent variable, offering insights into the strength and direction of their respective 

relationships with company value, along with statistical significance tests to validate these relationships. 

 

F-test x 

Table 4. F-test result 

  df SS MS F Significance F 

Regression 8 6.31420619 0.78927577 5.96674904 0.000 

Residual 146 19.3127383 0.13227903   
Total 154 25.6269445    

Source: Data processed (2023) 

 

The analysis of variance (ANOVA) table provides key insights into the overall significance of the 

regression model. The F-statistic, with a value of 5.96674904, tests the overall significance of the model. The 

p-value (0.000) associated with the F-statistic suggests that the regression model is statistically significant. In 

summary, the ANOVA results support the conclusion that the model, encompassing variables such as CSR, 

Environmental Cost, Eco-efficiency, and Environmental Performance, is not a result of random chance and 

significantly contributes to explaining the variability in company value. 

 

Regression and hypothesis test  

Table 5. Regression and hypothesis test result 

Variables Beta Significance 

(Constant) 0.735 0.000 

CSR 0.264 0.249 

Environmental Cost 0.251 0.000 

Eco-efficiency 0.138 0.038 
Environmental performance 0.053 0.001 

Source: Data processed (2023) 

Based on the results of the regression that has been done, the environmental cost, eco-efficiency, 



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environmental performance variables have a positive and significant effect on firm value, while CSR has not 

had a significant effect. The composition of the multiple regression model in this study is: 

 

Firm’s Value =  0.735 +  0.264CSR +  0.251EC +  0.138EE +  0.053EP (1) 

 

Environmental Cost and firm value 

According to the conducted hypothesis testing, a statistically significant relationship exists between 

environmental expenses and business value, as indicated by a significance level of 0.000. The environmental 

domain encompasses both internal costs related to mitigating the environmental impact of production 

operations and external expenses involved with remedying the damage caused by waste generation (Ladyve 

2020). The current environmental issues faced by the corporation are environmental contamination. 

Industrial activities, particularly those with a direct impact on natural ecosystems and the environment, have 

the potential to generate waste that can lead to environmental contamination. It is imperative for industrial 

enterprises to effectively handle trash prior to its discharge into the surrounding ecosystem. Environmental 

cost refers to continuous expenses, structures, and necessary resources to facilitate effective decision-making 

in environmental management. The environmental expenses borne by corporations have the potential to 

exert a beneficial influence on firm valuation, leading to an increase in overall worth. The allocation of 

environmental burdens by companies and the prioritization of environmental issues within business 

operations are critical factors in determining the environmental expenses incurred. These costs are crucial 

in assessing the impact of environmental programs and activities on company profitability (Dinniyah and 

Nuzula 2021). This phenomenon is consistent with prior studies undertaken by (Hapsari and Kurniawan 

2020; Nababan and Hasyir 2019; Okafor 2018), which assert that the expenditures associated with 

environmental management exert an inherent influence on both the performance and value of companies. 

Effectively mitigating the expenses associated with environmental degradation can significantly enhance the 

firm's performance and ensure its long-term sustainability. 

 

Environmental performance and firm values 
The results of the tests indicate a substantial positive relationship between environmental performance 

and business value, as evidenced by a significance level of 0.038. The public's evaluation incorporates 

environmental performance as a significant factor due to the growing awareness of environmental concerns, 

necessitating environmentally sustainable practices within a company's supply chain activities (Khan and 

Yu 2021). Investors have been shown to incorporate environmental, social, and governance (ESG) 

performance into their assessments of firm valuations, as indicated by the studies conducted by (Chouaibi 

et al. 2022; Hapsari and Kurniawan 2020). ESG-related endeavors prioritize enhancing a company's 

engagement with various stakeholders, encompassing shareholders, community members, suppliers, 

customers, and the environment. The company's environmental performance refers to its engagement in 

preserving and safeguarding the environment, particularly within its operational context (Dewi et al., 2023). 

Furthermore, environmental performance can indicate both favorable and unfavorable environmental 

circumstances surrounding the company (Iliemena 2020). In the future, the performance of companies is 

expected to be influenced by their environmental performance. Investors are keenly interested in allocating 

resources to companies that commit to environmental stewardship. Investors' perception of a company's 

environmental initiatives plays a crucial role in evaluating its response to the stock market. Investors expect 

that organizations might generate value through favorable environmental performance, prompting them to 

engage in bidding activities on the company's share price (Aini and Faisal 2021). This phenomenon is 

supported by previous studies conducted by (Chouaibi et al. 2022; Safitri and Nani 2021; Yao et al. 2019). 

 

Eco-Efficiency and firm value 

Eco-efficiency refers to the corporate endeavor of integrating environmental sustainability into their 

strategy and operations to respond to the demands and regulatory pressures from stakeholders and 

governmental entities concerning environmental concerns (Abdelhalim et al. 2023). The conducted 

experiments have demonstrated that eco-efficiency exhibits a notable and statistically significant impact on 

business value, as indicated by a significance level of 0.001. This research employs the ISO 14001 standard 

to evaluate the extent to which a corporation effectively and optimally implements eco-efficiency practices. 

Eco-efficiency refers to the ability of firms to enhance their profitability by concurrently minimizing 

environmental consequences, resource consumption, and costs (Safitri et al. 2019). Enhancing the energy 

eco-efficiency of an industry is a crucial factor in achieving sustainable development objectives within 

regional and industrial ecosystems. This is accomplished by reducing energy consumption and increasing 

economic output per unit of natural resources utilized while mitigating adverse environmental 



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consequences. Such efforts are likely to attract the attention of both investors and general public companies 

(Shah et al. 2020). This finding is consistent with previous research conducted by (Safitri et al. 2019; Yao et 

al. 2019), suggesting that a strong eco-efficiency will positively influence a company's overall performance 

and subsequently enhance its market value. 

 

CSR and firm values 

Corporate Social Responsibility (CSR) is a strategic approach business adopt to gain a competitive 

edge while upholding their social obligations. It serves as a framework to address the adverse impacts of 

business operations and enhance the well-being of stakeholders, encompassing consumers, the environment, 

and others (Newman et al. 2020; Ying et al. 2022). According to the findings of this study, corporate social 

responsibility (CSR) does no effect the company value, as indicated by a coefficient of 0.249, which falls 

below the conventional threshold of 0.05. Implementing corporate social responsibility (CSR) goes beyond 

enhancing a company's image among shareholders and stakeholders. Corporations must undertake CSR 

initiatives with a profound understanding of their significance (Cahyani and Mayangsari 2022). This study 

is consistent with previous studies conducted by Aini and Faisal (2021) and Fahad and Busru (2021), which 

found that corporate social responsibility (CSR) does not have a statistically significant impact on firm value. 

Multiple factors contribute to this phenomenon, including the inadequate disclosure and implementation of 

corporate social responsibility (CSR) practices by numerous corporations in Indonesia and the failure to 

adhere to the Global Reporting Initiative (GRI) criteria. As mentioned earlier, the phenomenon is evident 

in the descriptive mean of the statistical data presented in this study, indicating that the observed 

organizations reveal their corporate social responsibility (CSR) practices to the extent of 51 %, or 76 out of 

the total 151 indicators. However, the corporations utilized in this study are categorized as environmentally 

sensitive firms exhibiting commendable environmental performance. Many investors believe that increased 

corporate social responsibility (CSR) disclosure is detrimental to profitability and a firm's overall value. The 

lack of positive corporate behavior towards corporate social responsibility (CSR) activities, the absence of a 

sustainable investment culture among investors, and the relatively lower sensitivity and awareness of 

consumers towards corporate CSR practices compared to other developed countries have contributed to this 

phenomenon 

 

CONCLUSION 

 

According to existing research, evidence suggests that factors such as environmental cost, eco-

efficiency, environmental performance, and corporate social responsibility (CSR) might contribute positively 

to a business's overall value. However, it is essential to note that CSR, in particular, still requires further 

examination to ascertain its precise impact on firm value. Nevertheless, this study has demonstrated that the 

observed companies, which are environmentally conscious, have fulfilled the research assumptions. 

Specifically, the environmental accounting practices adopted by these companies have effectively enhanced 

their overall value. Consequently, many company owners and investors perceive the implementation of 

environmental accounting as a positive attribute for these companies. This observation indicates a favorable 

trajectory in the adoption of environmental accounting practices among companies in Indonesia. 

Consequently, organizations can allocate greater attention toward executing diverse policies and programs 

on environmental sustainability, thereby enhancing their overall corporate value. The study is subject to 

certain limitations, mostly stemming from the small sample size and reliance on measurement proxies that 

do not comprehensively understand each variable. It is anticipated that the subsequent study will incorporate 

a range of variables about environmental accounting, including eco-innovation, which serves as an 

evaluative measure for associated subjects. Furthermore, it is anticipated that future research endeavors will 

employ a more extensive and inclusive sample, encompassing environmentally sensitive corporations and 

entities operating in other industries. This approach will enable researchers to establish meaningful 

comparisons among these entities. Future research will employ more contemporary proxies to elucidate 

each component thoroughly. There is an expectation that companies should prioritize the disclosure of 

environmental costs and corporate social responsibility (CSR) while promptly pursuing ISO 14001 

certification and actively seeking the PROPER award. These various elements possess inherent value for 

both investors and company owners, as they have the potential to enhance the overall value of the company. 

 

 

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