Detecting the Green Mirage in Sustainability Reporting: The Role of Board Characteristics and Corporate Governance in Indonesia’s Energy and Basic Materials Sectors

Rizky Prasetya; Edi Winarto; Fathimatus Zahro Fazda Oktavia; Rosy Aprieza Puspita Zandra

doi:10.55681/economina.v5i9.4415

Authors

Rizky Prasetya Politeknik Negeri Malang, Indonesia
Edi Winarto
Fathimatus Zahro Fazda Oktavia Politeknik Negeri Malang, Indonesia
Rosy Aprieza Puspita Zandra Politeknik Negeri Malang, Indonesia

DOI:

https://doi.org/10.55681/economina.v5i9.4415

Keywords:

Board Characteristics, Corporate Governance, Green Mirage, PROPER, Sustainability Reporting

Abstract

This study aims to detect the Green Mirage phenomenon in sustainability reporting and to analyse the effect of board of commissioners’ characteristics and corporate governance mechanisms on this phenomenon. The Green Mirage is defined as the gap between the quality of sustainability disclosure based on the Global Reporting Initiative (GRI) standards and actual environmental performance as measured by the PROPER rating issued by Indonesia’s Ministry of Environment and Forestry. This quantitative study uses panel data from 48 energy and basic materials companies listed on the Indonesia Stock Exchange during 2020–2024, yielding 240 firm-year observations. The data were analysed using panel data regression in STATA. The results show that the average Green Mirage Index is 1.342, meaning that the issuers’ sustainability disclosure is 34.2% higher than their actual environmental performance. Board gender diversity and board independence have a negative and significant effect on the Green Mirage, whereas board size and family ownership have no significant effect. In contrast, the sustainability committee has a positive and significant effect, which is amplified in family firms and weakens the monitoring role of independent commissioners, indicating a governance façade. These findings provide early warning indicators for regulators, investors, and companies to mitigate greenwashing in support of Indonesia’s 2060 Net Zero Emission target.

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