Corporate Governance and ESG Disclosure: An Empirical Study of Companies in the Basic Materials and Energy Sectors

Abstract

This study investigates the impact of corporate governance mechanisms, namely board effectiveness, audit committee effectiveness, and foreign ownership, on the quality of Environmental, Social, and Governance (ESG) disclosure. Focusing on firms in the basic materials and energy sectors listed on the Indonesia Stock Exchange during the 2022–2024 period, the study employs a content analysis approach based on the Global Reporting Initiative (GRI) Standards 2021, combined with panel data regression analysis using 447 firm-year observations. The empirical results indicate that board effectiveness, audit committee effectiveness, and foreign ownership have a positive and significant influence on ESG disclosure quality. These findings are consistent with Agency Theory, which emphasizes monitoring mechanisms to reduce information asymmetry, and Resource Dependence Theory, which highlights the role of governance structures in providing strategic resources. Overall, the study underscores the importance of effective governance in improving transparency within environmentally sensitive industries operating under a two-tier governance system.