Financial Performance Impact on ESG Disclosure of Listed Agro-Industrial Companies in Indonesia: Do Environmental Sensitivity and Customer Proximity Matter?

Agro-industrial companies concerned to ESG implementation and disclosure by considering their financial resources to meet the stakeholders' needs.Regarding the ESG implementation and disclosure, the existence of environmental sensitivity and customer proximity are being considered also.Hence, if those companies have more environmentally sensitive and more proximity to customer, those will also affect the way for companies to implement and disclose ESG.This research aimed to investigate the moderating impact of environmental sensitivity and customer proximity on the association between financial performance and Environmental, Social, and Governance (ESG) disclosure.Moderated Regression Analysis was employed for this study.The population of this study was agro-industrial companies listed on the Indonesia Stock Exchange during the period from 2019 to 2021 and the sample consisted of 49 observations from 18 agro-industrial companies.The findings of this study revealed that financial performance, specifically measured through Return on Equity (ROE) and Net Profit Margin (NPM), significantly influenced ESG reporting.Moreover, the moderating effect in this relationship was observed only in the case of customer proximity, while environmental sensitivity did not exhibit such a moderating influence.The result of this study implicated to the agro-industrial companies in which ESG policy both implementation and disclosure.Ultimately, they are able to implement and disclose ESG by considering the stakeholders' need and still able to maintain their sustainable financial performance.