Exploring Contributing Factors to Environmental Disclosures in Islamic Commercial Banks of Indonesia

Sarah Hana Hanifah, Dwi Retno Widiyanti

Abstract


This study aims to provide an overview and analysis of the influence of policy and corporate governance, including Sharia supervisory board, firm size, firm age, and leverage on green banking disclosure in Islamic commercial banks in Indonesia from 2017 to 2021. This study uses a quantitative approach with panel data regression analysis to examine the causal relationship between the independent variables (policy, board size, board of commissioners, Sharia Supervisory Board, firm size, firm age, and leverage) and green banking disclosures. Islamic commercial banks registered with FSA and IDX are the study population. The sampling method in this study was purposive sampling, with a total sample of six Islamic commercial banks for five years of research. The results of this study show that the company's age, the size of the company, the size of the board of directors, and the board of commissioners have a significant effect on the disclosure of green banking. Meanwhile, Sharia board and leverage do not significantly affect green banking disclosure. This study implies that applying green banking to overcome environmental problems can only be realized by regulation alone, considering the importance of other factors from the bank's side.

Keywords


Green Banking; Islamic Bank; Corporate Governance; Sharia Supervisory Board; Firm size; Firm Age; Leverage;

Full Text:

PDF

References


Abdelzaher, D. M., Kotb, A., & Helfaya, A. (2019). Eco-Islam: Beyond the Principles of Why and What, and Into the Principles of How. Journal of Business Ethics, 155(3), 623–643. https://doi.org/10.1007/s10551-017-3518-2 Ahmad, F., Zayed, N.M., & Harun, M.A. (2013). Factors Behind the Adoption of Green Banking in Commercial Banks 243 Literature Review. Bae, K.-H., Kang, J.-K., & Wang, J. (2011). Employee treatment and firm leverage: A test of the stakeholder theory of capital structure. Journal of Financial Economics, 100(1), 130–153. https://doi.org/10.1016/j.jfineco.2010.10.019 Bagus, P., Gabriel, A., & Howden, D. (2016). Reassessing the Ethicality of Some Common Financial Practices. Journal of Business Ethics, 136(3), 471–480. https://doi.org/10.1007/s10551-014-2525-9 Birindelli, G., & Palea, V. (2023). To green or not to green? How CSR mechanisms at the governance level affect the likelihood of banks pursuing green product strategies. Corporate Governance: The International Journal of Business in Society, 23(1), 219–242. https://doi.org/10.1108/CG-09-2021-0349 Bose, S., Khan, H. Z., Rashid, A., & Islam, S. (2018). What drives green banking disclosure? An institutional and corporate governance perspective. Asia Pacific Journal of Management, 35(2), 501–527. https://doi.org/10.1007/s10490-017-9528-x Bukhari, S. A. A., Hashim, F., Amran, A. B., & Hyder, K. (2019). Green Banking and Islam: Two sides of the same coin. Journal of Islamic Marketing, 11(4), 977–1000. https://doi.org/10.1108/JIMA-09-2018-0154 De Villiers, C., Naiker, V., & Van Staden, C. J. (2011). The Effect of Board Characteristics on Firm Environmental Performance. Journal of Management, 37(6), 1636–1663. https://doi.org/10.1177/0149206311411506 DiMaggio, P. J., & Powell, W. W. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review, 48(2), 147. https://doi.org/10.2307/2095101 Fahmi, I. (2017). Analisis Laporan Keuangan. Bandung: Alfabeta Fatemi, A., Glaum, M., & Kaiser, S. (2018). ESG performance and firm value: The moderating role of disclosure. Global Finance Journal, 38, 45–64. https://doi.org/10.1016/j.gfj.2017.03.001 Fatonah, S., Studi, P., Manajemen, M., Studi, P., & Manajemen, M. (2017). Faktor-faktor yang mempengaruhi pelaksanaan green banking. Seminar Nasional Teknologi Informasi dan Bisnis (SENATIB), 333–338. Ghozali, I. and Chariri, A. (2014). International Accounting Theory Financial Reports (IFRS) Issue 4. Semarang: Diponegoro University Publishers Agency Grassa, R., El-Halaby, S., & Hussainey, K. (2019). Chapter 13 Corporate Governance and Multi-corporate Disclosures Evidence from Islamic Banks. In T. Azid, A. A. Alnodel, & M. A. Qureshi (Eds.), Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice (pp. 167–187). Emerald Publishing Limited. https://doi.org/10.1108/978-1-78973-007-420191014 Handajani, L. (2019). Corporate Governance dan Green Banking Disclosure: Studi pada Bank di Indonesia. Jurnal Dinamika Akuntansi dan Bisnis, 6(2), 121–136. https://doi.org/10.24815/jdab.v6i2.12243 Hanif. Ningsih, N. W., & Iqbal, F. (2020). Green Banking Terhadap Profitabilitas Bank Umum Syariah di Indonesia. FIDUSIA: Jurnal Ilmu Keuangan dan Perbankan, 3(2), 86-99. Harjoto, M. A. (2017). Corporate social responsibility and degrees of operating and financial leverage. Review of Quantitative Finance and Accounting, 49(2), 487–513. https://doi.org/10.1007/s11156-016-0598-5 Henderson, R. M., Reinert, S. A., Dekhtyar, P., & Migdal, A. (2017). Climate Change in 2017: Implications for Business. Hussain, A., Khan, M., Rehman, A., Sahib Zada, S., Malik, S., Khattak, A., & Khan, H. (2021). Determinants of Islamic social reporting in Islamic banks of Pakistan. International Journal of Law and Management, 63(1), 1–15. https://doi.org/10.1108/IJLMA-02-2020-0060 IFC. (2015). Greening the banking system - experiences from the sustainable banking network (SBN). Julia, T., & Kassim, S. (2020). Exploring green banking performance of Islamic banks vs conventional banks in Bangladesh based on Maqasid Shariah framework. Journal of Islamic Marketing, 11(3), 729–744. https://doi.org/10.1108/JIMA-10-2017-0105 Julia, T., Rahman, M. P., & Kassim, S. (2016). Shariah compliance of green banking policy in Bangladesh. Humanomics, 32(4), 390–404. https://doi.org/10.1108/H-02-2016-0015 Kawabata, T. (2019). What are the determinants for financial institutions to mobilise climate finance? Journal of Sustainable Finance & Investment, 9(4), 263–281. https://doi.org/10.1080/20430795.2019.1611148 Kasmir. (2016). Analisis Laporan Keuangan. Jakarta: Raja Grafindo Persada. Katadata.co.id. (2022). The Bank with the Strongest 'Green Banking' Image, Who's the Champion? Accessed on 14 April 2023, from https://databoks.katadata.co.id/datapublish/2022/06/07/bank-dengan-citra-green-banking-terkuat-siapa-juaranya Khan, B.F. (2017), Governance for Green Growth in Bangladesh: Policies, Institutions and Political Economy. London: Adam Smith International Laguir, I., Marais, M., El Baz, J., & Stekelorum, R. (2018). Reversing the business rationale for environmental commitment in banking: Does financial performance lead to higher environmental performance? Management Decision, 56(2), 358–375. https://doi.org/10.1108/MD-12-2016-0890 Lako, Andreas. (2014). Green Economy. Semarang: PT. Gelora Aksara Pratama Maryatun, Triyana. (2017). The Effect of Corporate Social Responsibility Disclosure, Firm Size, Financial Leverage, Profit Management on the Cost of Equity. 11–27. Merina, C. I., & Noviardy, A. (2015). Determinant Analysis of Corporate Social Responsibility (CSR) Disclosures of Go Public Companies in Indonesia. Bina Darma E-Journal. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2): 340–363. Mir, A. A., & Bhat, A. A. (2022). Green banking and sustainability – a review. Arab Gulf Journal of Scientific Research, 40(3), 247–263. https://doi.org/10.1108/AGJSR-04-2022-0017 Mishra, S., & Modi, S. B. (2013). Positive and Negative Corporate Social Responsibility, Financial Leverage, and Idiosyncratic Risk. 431–448. https://doi.org/10.1007/s10551-012-1526-9 Murdiansyah, I. (2021). Leverage, Size of the Board of Commissioners, Size of the Sharia Supervisory Board and Its Effect on Disclosure of Islamic Social Reporting (ISR) 2015-2018. 5(1), 43–56. Ningrum, R., Fachrurrozie, F., & Jayanto, P. (1). The Influence of Financial Performance, Institutional Ownership and Size of the Sharia Supervisory Board on ISR Disclosure. Accounting Analysis Journal, 2(4). https://doi.org/10.15294/aaj.v2i4.4169 Nouh, M. (2016). Sustainable development in a Muslim context. Nurrahmawati, A., Rahmawati, W., Perwitasari, W., & Kurniawati, E.M. (2021). CSR reporting levels and financial quality: comparative analysis in Indonesian sharia and conventional banking. Forum Ekonomi, 23(2), 231–240. Oyegunle, A., & Weber, O. (2015). Development of Sustainability and Green Banking Regulations: Existing Codes and Practices. Canada: Centre for International Governance Innovation. Prado-Lorenzo, J. M., & García-Sánchez, I. M. (2010). The role of the board of directors in disseminating relevant information on greenhouse gases. Journal of Business Ethics, 97(3): 391–424. Qian, W. and Schaltegger, S. (2017). Revisiting carbon disclosure and performance: legitimacy and management views. The British Accounting Review, 49(4), 365-379. doi: 10.1016/j. bar.2017.05.005 Rahman, S. A., Yusoff, R. b., Mohamed, W. N. (2009). Environmental disclosure and financial performance: An empirical study of Malaysia, Thailand and Singapore. Social and Environmental Accountability Journal, 29(2), 46–58. Saha, A. K. (2019). Relationship between corporate social responsibility performance and disclosures: commercial banks of Bangladesh. Social Responsibility Journal, 15(4), 451–468. https://doi.org/10.1108/SRJ-07-2017-0137 Sharmeen, K., & Yeaman, A. M. (2020). Benefits That Islamic and Conventional Banks Can Attain by Implementing Green Banking. Journal of Islamic Monetary Economics and Finance, 6(4), 833–860. https://doi.org/10.21098/jimf.v6i4.1134 Singh, N. B., & Basu, M. S. (2004). Groundnut research in India: An overview. In M. S. Basu & N. B. Singh (Eds.), Groundnut research in India, (pp. 1–6). Junagadh, Gujarat, India: National Research Center for Groundnut (ICAR) United Nations. (2016, April). Sustainable development goals, Lists of Parties that Signed the Paris Agreement. www.un.org/sustainabledevelopment/blog/2016/04/ parisagreementsingatures/ United Nations. (2022, April). UN climate report: It’s ‘now or never’ to limit global warming to 1.5 degrees. https://news.un.org/en/story/2022/04/1115452/ (accessed 3 March 2023) Wickert, C., Scherer, A. G., & Spence, L. (2016). Walking and talking corporate social responsibility: Implications of firm size and organizational cost. Journal of Management Studies, 53(7), 1169–1196 Yassin, M., & Ali, S. A. (2020). Survival of new institutional sociology theory: The case of environmental management accounting in the Egyptian context. International Journal of Customer Relationship Marketing and Management, 11(1), 50–63. https://doi.org/10.4018/IJCRMM.2020010104 Younis, H., & Sundarakani, B. (2020). The impact of firm size, firm age and environmental management certification on the relationship between green supply chain practices and corporate performance. Benchmarking, 27(1), 319–346. https://doi.org/10.1108/BIJ-11-2018-0363




DOI: https://doi.org/10.18860/miec.v3i2.23818

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Editorial Office:
Megawati Soekarnoputri Building
Faculty of Economics
Jln. Gajayana 50 Telp (0341) 558881
E-mail: m-iecjournal@uin-malang.ac.id
Universitas Islam Negeri Maulana Malik Ibrahim Malang

Member of:

 

Indexed by:

   

Creative Commons License

M-IEC Journal under a CC BY SA 4.0 International License.

View My Stats