The Effect of Sustainability Report and Company Size on Financial Performance

Abstract

This study explores the impact of sustainability report disclosure and company size on the financial performance of energy sector firms listed on the Indonesia Stock Exchange during the 2020–2024 period. Financial performance is evaluated using Return on Assets (ROA), which serves as an indicator of a company’s profitability in relation to its total assets. The independent variables include sustainability report disclosure, measured through the Global Reporting Initiative (GRI) index, and company size, measured by the natural logarithm of total assets. The research applies a quantitative approach utilizing secondary data obtained from annual and sustainability reports of the selected companies. Data analysis techniques comprise classical assumption testing, ANOVA, t-tests, and the coefficient of determination (R²) to assess the model’s significance and explanatory capacity. The results indicate that sustainability report disclosure has no significant effect on financial performance, suggesting that sustainability practices may not yield immediate financial benefits. Conversely, company size shows a positive and significant influence on financial performance, implying that larger firms are more likely to attain higher levels of profitability as a result of their superior resource availability, greater operational efficiency, and the advantages derived from economies of scale. These findings highlight that company size remains a dominant determinant of financial performance in the energy sector, while sustainability reporting primarily functions as a means of transparency and accountability with limited short-term financial outcomes. Future research is recommended to incorporate additional variables such as leverage, firm age, or corporate governance to provide a more comprehensive analysis of the factors influencing corporate financial performance.