DRIVERS OF SUSTAINABILITY REPORTING QUALITY: THE ROLES OF STAKEHOLDER PRESSURE, PROFITABILITY, AND COMPANY ACTIVITIES

Abstract

Abstract

Sustainability reporting is a corporate practice that involves disclosing and measuring business activities as a form of accountability to stakeholders, with a focus on organizational performance and effectiveness in realizing sustainable development objectives. This research aims to investigate and empirically test the influence of employee pressure, investor pressure, profitability, and company activities on the quality of sustainability reports. The study utilizes stakeholder theory and legitimacy theory as its conceptual foundations. The research population comprises energy sector companies listed on the Indonesia Stock Exchange from 2019 to 2022. Utilizing purposive sampling, 66 observations were gathered and analyzed using multiple linear regression. The findings reveal that employee pressure and profitability exert significant positive effects on sustainability report quality, suggesting that internal pressures and performance outcomes drive enhanced sustainability disclosures. Conversely, investor pressure and company activities do not show a significant impact on the quality of sustainability reports. These results illuminate the nuanced role of organizational and financial dynamics in shaping corporate transparency and accountability, highlighting the greater relevance of internal stakeholder interests and firm profitability relative to external investor influence and operational activity scope. This study contributes to the understanding of how stakeholder demands and performance metrics affect corporate sustainability practices within the energy sector.