IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v17y2024i7p296-d1433295.html
   My bibliography  Save this article

Unpacking Environmental, Social, and Governance Score Disparity: A Study of Indonesian Palm Oil Companies

Author

Listed:
  • Iwan Suhardjo

    (Department of Accounting and Information System, University of Canterbury, Christchurch 8041, New Zealand
    Department of Accounting, Faculty of Management and Business, Universitas Internasional Batam, Kota Batam 29426, Indonesia)

  • Chris Akroyd

    (Department of Accounting and Information System, University of Canterbury, Christchurch 8041, New Zealand)

  • Meiliana Suparman

    (Department of Accounting, Faculty of Management and Business, Universitas Internasional Batam, Kota Batam 29426, Indonesia)

Abstract

This study investigates the inconsistencies in ESG scores assigned by different rating agencies. Focusing on two Indonesian palm oil companies, this paper examines the link between their reported sustainability performance and the resulting ESG scores. This study employs content analysis to assess how the companies disclose information around double materiality, stakeholder engagement, and certifications. Additionally, the methodologies used by two rating agencies are reviewed to identify potential misalignments. The analysis reveals discrepancies in the ratings, suggesting factors like differences in the level of engagement with each company and scoring methodologies might be at play. This highlights the need for standardized sustainability reporting and more transparent rating methodologies within the palm oil industry. While limited to two companies and two agencies, the findings can inform efforts to improve transparency both in sustainability practices and scoring methodologies. This would ultimately lead to more reliable ESG scores, benefiting all related stakeholders. To goal of this study is to promote responsible practices in the palm oil industry by emphasizing the impact of reporting practices.

Suggested Citation

  • Iwan Suhardjo & Chris Akroyd & Meiliana Suparman, 2024. "Unpacking Environmental, Social, and Governance Score Disparity: A Study of Indonesian Palm Oil Companies," JRFM, MDPI, vol. 17(7), pages 1-16, July.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:296-:d:1433295
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/17/7/296/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/17/7/296/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nicola Raimo & Alessandra Caragnano & Marianna Zito & Filippo Vitolla & Massimo Mariani, 2021. "Extending the benefits of ESG disclosure: The effect on the cost of debt financing," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1412-1421, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claudia Arena & Saverio Bozzolan & Claudia Imperatore, 2024. "Enhancing environmental reporting: A study on the role of narrative disclosure, firm‐ and country‐level incentives," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3414-3428, July.
    2. Verrier, Brunilde & Strachan, Neil, 2024. "Sunset and sunrise business strategies shaping national energy transitions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 195(C).
    3. Berenike Wiener & Georg von Schnurbein, 2023. "Foundation Investment Funds for Grant-Making Foundations in Germany: Do They Facilitate Sustainable Investing?," SAGE Open, , vol. 13(4), pages 21582440231, December.
    4. Finja Lena Kind & Jennifer Zeppenfeld & Rainer Lueg, 2023. "The impact of chief executive officer narcissism on environmental, social, and governance reporting," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4448-4466, November.
    5. Wenchuan Huang & Shouming Chen & Talib Hussain & Ahmed Rabeeu, 2024. "How spirituality affects individuals’ attitudes towards corporate social responsibility: a moderated mediation model," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    6. Li, WeiWei & Padmanabhan, Prasad & Huang, Chia-Hsing, 2024. "ESG and debt structure: Is the nature of this relationship nonlinear?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    7. Eugene Kang & Nguyen Bao Lam, 2023. "The impact of environmental disclosure on initial public offering underpricing: Sustainable development in Singapore," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 119-133, January.
    8. Rong Ma & Rakesh B. Sambharya, 2024. "International diversification and corporate social responsibility disclosure quality: Employee versus environmental dimensions," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4248-4264, September.
    9. Liu, Min & Guo, Tongji & Ping, Weiying & Luo, Liangqing, 2023. "Sustainability and stability: Will ESG investment reduce the return and volatility spillover effects across the Chinese financial market?," Energy Economics, Elsevier, vol. 121(C).
    10. Andrieș, Alin Marius & Sprincean, Nicu, 2023. "ESG performance and banks’ funding costs," Finance Research Letters, Elsevier, vol. 54(C).
    11. Ahmed El Oubani, 2024. "Investor sentiment and sustainable investment: evidence from North African stock markets," Future Business Journal, Springer, vol. 10(1), pages 1-20, December.
    12. Vitiana L'Abate & Nicola Raimo & Benedetta Esposito & Filippo Vitolla, 2024. "Examining the impact of circular economy disclosure on the cost of debt: A signaling theory approach via social media," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4007-4019, September.
    13. Cong Zhang & Shanyue Jin, 2022. "What Drives Sustainable Development of Enterprises? Focusing on ESG Management and Green Technology Innovation," Sustainability, MDPI, vol. 14(18), pages 1-20, September.
    14. Meng, Jia & Zhang, ZhongXiang, 2022. "Corporate Environmental Information Disclosure and Investor Response: Empirical Evidence from China's Capital Market," FEEM Working Papers 317842, Fondazione Eni Enrico Mattei (FEEM).
    15. Ajit Dayanandan & Han Donker & Sudershan Kuntluru, 2024. "IFRS and ESG Disclosure in Indian Corporate Sector," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 23(2), pages 143-169, June.
    16. Khayria Amarna & Raquel Garde Sánchez & Maria Victoria López‐Pérez & Mahmoud Marzouk, 2024. "The effect of environmental, social, and governance disclosure and real earning management on the cost of financing," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3181-3193, July.
    17. Magdalena Zioło & Iwona Bąk & Anna Spoz, 2023. "Theoretical framework of sustainable value creation by companies. What do we know so far?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2344-2361, September.
    18. Chen, Qian & Li, Yang & Zhao, Qiuyun & Liu, Fan, 2024. "Information quality and cost of credit bond financing," Finance Research Letters, Elsevier, vol. 59(C).
    19. Witness Siwela & Collins C. Ngwakwe, 2024. "Effect of Corporate Environmental Performance on Banks’ Loan Pricing," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 178-191, May.
    20. Xue, Qinyuan & Jin, Yifei & Zhang, Cheng, 2024. "ESG rating results and corporate total factor productivity," International Review of Financial Analysis, Elsevier, vol. 95(PA).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:296-:d:1433295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.