Revisiting Indonesian corporate carbon disclosure: does greenwashing obstruct true carbon reduction?

Abstract With corporate disclosure of carbon information becoming steadily more important, there is a growing discussion regarding the assumption of a greenwashing issue within corporate carbon disclosure practices that raises the long-standing question of the sincerity of corporate concern. Prior studies of non-financial disclosure have predominantly focused on drivers of carbon disclosure without curiosity to ensure that carbon disclosure may be a substitute for poor carbon performance. This study investigates whether a company’s voluntary carbon disclosure accurately represents its carbon performance. The carbon disclosure score was measured based on content analysis of sustainability reports, and the carbon intensity of emissions was employed to calculate corporate carbon performance. Based on a sample of 38 Indonesian public companies in 2020-2022, the study finds carbon disclosure and carbon performance have a significant positive relationship, showing that carbon disclosure score reflects actual corporate carbon performance. This study finds, based on statistical graphs and hypothesis testing results, greenwashing undetected in the Indonesian context. Even so, this study offers practical suggestions for the government by providing standard guidelines for carbon emissions disclosure to facilitate diverse companies’ characteristics and companies should be confident of their performance to collect stakeholder attention.