Do sustainable development goals and carbon emission disclosures have an impact on financial performance?

Abstract

This study aims to examine the impact of Sustainable Development Goals (SDGs) disclosure and carbon emission disclosure on financial performance in Indonesia. The sample consists of 55 companies listed in the Jakarta Islamic Index (JII) with a total of 256 firm-year observations during the 2020–2024. This study employs panel data regression using the Fixed Effect Model (FEM). The results show that SDGs disclosure has a negative effect on financial performance. However, carbon emission disclosure has no significant effect on financial performance. These findings suggest that SDGs may increase sustainability related expenditures, thereby exerting pressure on firm’s financial performance. This study contribute to the sustainability and accounting literature by employing a pretax income to average equity to mitigate the influence of sectoral differences in tax rates.These findings are expected to serve as a reference for companies, governments, and regulators in formulating policies that support business sustainability.