Assesing the Financial Relevance and SASB Compliance of Sustainability Reports Among Indonesian Listed Companies

Abstract

This study aims to assess the level of compliance with SASB standards in the sustainability reports of Indonesian
companies, identify the predominant key topics associated with each materiality issue, and evaluate the relevance of these issues to
financial performance across various industries. This study employed a mixed-content analysis of sustainability reports from
Indonesian listed companies that adopted the SASB framework. The findings revealed considerable variation in compliance, with
half of the industries attaining a perfect Disclosure Topic Compliance Index (DTCI) score. The analysis of materiality issues
highlighted distinct discourses across industries, suggesting that each industry possessed unique concerns related to ESG matters.
Financial relevance was evident, as industries that provided extensive reporting on financially material topics demonstrated higher
Industry Financial Relevancy Index (IFRI) scores. However, perfect DTCI scores did not consistently correlate with financial
relevance. In conclusion, the adoption of the SASB framework among Indonesian companies should be strengthened to improve the
quality of sustainability reporting. Enhancing compliance with the SASB framework is essential for producing informative and
financially material sustainability reports. Prioritizing comprehensive and relevant disclosures can strengthen the alignment between
sustainability practices and financial performance, thereby promoting long-term value creation and investor confidence.