The Effect of Sustainability Reporting on the Profitability of IDX-Listed SOEs

Abstract

This research examines the impact of the Environmental Disclosure Score (EDS), Social Disclosure Score (SDS), and Governance Disclosure Score (GDS) on the profitability of state-owned enterprises (SOEs) listed on the Indonesia Stock Exchange (IDX). The research sample comprises twenty-four state-owned enterprises listed on the IDX that regularly issued sustainability reports throughout the study period. A total of 72 company-year observations were chosen using purposive sampling. Profitability, assessed through Return on Assets (ROA), was analyzed between 2023 and 2025, whereas the Environmental Disclosure Score, Social Disclosure Score, and Governance Disclosure Score were reviewed from 2022 to 2024. The main analytical method used in the study was multiple linear regression. The research indicates that a firm's profitability is not greatly affected by its Environmental Disclosure Score. However, the Social Disclosure Score positively affects company profitability. Nonetheless, the Governance Disclosure Score adversely affects the profitability of state-owned enterprises listed on the Indonesia Stock Exchange. These results suggest that SOE management must prioritize enhancing the efficiency and financial benefits of social sustainability initiatives, while also ensuring that governance structures and transparency practices are executed effectively without incurring excessive expenses that could diminish short-term profits. The results also offer insights for investors and policymakers in assessing ESG disclosure by taking into account the varying economic impacts of each sustainability dimension instead of viewing ESG disclosure as a unified overall metric.