The Effect of Profitability, Liquidity, Leverage and Public Ownership on Environmental Disclosure in Mining Companies Listed on the Indonesia Stock Exchange From 2020-2024

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FORMOSA NEWS - Surabaya - Financial Strength Drives Environmental Transparency in Indonesian Mining Firms, Study Finds. A 2026 study by Marta Niska Sari and Eni Wuryani of Surabaya State University reveals that financial performance plays a decisive role in how openly mining companies in Indonesia disclose their environmental impact. Analyzing firms listed on the Indonesia Stock Exchange (IDX) between 2020 and 2024, the research highlights why some companies are more transparent about environmental issues than others an increasingly critical concern amid rising ecological risks tied to mining activities. The findings matter as Indonesia’s mining sector remains a major contributor to national income while also being a leading source of environmental degradation. Greater transparency in environmental reporting is now seen as essential for balancing economic growth with sustainability.

Environmental Pressure Meets Corporate Responsibility
Indonesia’s mining industry contributes significantly to GDP and employment, but its environmental footprint continues to draw scrutiny. Cases of deforestation, water contamination, and ecosystem damage such as those reported in karst regions and nickel mining zones—have intensified public and regulatory pressure. To address these concerns, Indonesian regulators require publicly listed companies to publish sustainability reports under frameworks like the Global Reporting Initiative (GRI). These reports include environmental disclosure, which reflects how companies communicate their environmental impact and mitigation efforts.

Simple Data, Strong Insights
The study uses a quantitative approach based on financial and sustainability data from 19 mining companies that consistently published annual and sustainability reports over five years. In total, 95 firm-year observations were analyzed. Environmental disclosure was measured using 32 indicators from the GRI 2021 standards, covering areas such as energy use, emissions, waste management, biodiversity, and environmental compliance.
The researchers applied multiple linear regression analysis to examine how four key factors influence environmental disclosure:

• Profitability.
• Liquidity.
• Leverage (debt level).
• Public ownership.

Key Findings: Two Drivers and Two Barriers

The results show a clear pattern in how financial and ownership structures affect environmental transparency:
Factors that increase environmental disclosure:

• Profitability: Companies with higher profits are more likely to disclose environmental information.
• Liquidity: Firms with strong short-term financial health tend to be more transparent.

Factors that decrease environmental disclosure:

• Leverage: Companies with higher debt levels disclose less environmental information.
• Public ownership: A larger proportion of public shareholders is linked to lower disclosure levels.

Together, these four variables explain 80.5% of the variation in environmental disclosure among the sampled companies, indicating a strong relationship between financial conditions and transparency.

Real-World Implications for Business and Policy

The findings offer practical insights for multiple stakeholders:

• For companies: Strong financial performance enables better environmental transparency. Firms should balance profitability with sustainability commitments.
• For regulators: Companies with high leverage may require stricter oversight to ensure compliance with environmental reporting standards.
• For investors: There is a need to consider environmental disclosure alongside financial metrics when making investment decisions.

The research reinforces the idea that environmental disclosure is not just a regulatory obligation but a strategic asset that can enhance corporate reputation and stakeholder trust.

Author Profile

Marta Niska Sari is a researcher in accounting and sustainability at Surabaya State University. Her work focuses on corporate transparency, financial performance, and environmental responsibility.
Eni Wuryani is a lecturer at Surabaya State University specializing in financial accounting, corporate governance, and sustainability reporting. 

Source
Sari, Marta Niska & Wuryani, Eni. 2026. The Effect of Profitability, Liquidity, Leverage and Public Ownership on Environmental Disclosure in Mining Companies Listed on the Indonesia Stock Exchange From 2020–2024. Formosa Journal of Applied Sciences, Vol. 5 No. 3, pp. 885–902.
DOI: https://doi.org/10.55927/fjas.v5i3.25
URL: https://journalfjas.my.id/index.php/fjas