PRELIMINARY VALUATION OF CONSUMER GOODS COMPANIES’ READINESS FOR SUSTAINABILITY REPORTING

Abstract

Over the last few years, previous researchers acknowledge that the demands for businesses to behave consistently to the social and environmental factors in respond to the sustainability development are growing (Milne et al., 2009). Consequently, the companies should have issue the sustainability report in order to minimize one of the critical issues, which is resource shortage. Thereupon, the purpose of this study is to find out the extent to whether or not the companies are ready to issue sustainability report. Internal factors of the company (e.g. company size based on market capitalization, company age and company’s financial performance) is applied as the tools of the preliminary valuation. Samples of 30 consumer goods companies listed in IDX from 2012-2016 period were used. The association between internal factors and sustainability reporting was examined using multiple linear regression analysis. However, the results show that the internal factors are not the appropriate preliminary valuation for testing the readiness of the companies towards sustainability reporting practice. This study can be further researched using case study method to test the appropriateness of GRI indicators towards the company’s current situation.