The Price of Looking Green:  Does Greenwashing Have Multiple Facets?

Adinda Noor Widowati; Resi Ariyasa Qadri; Adita Queenola Larasati

doi:10.33395/owner.v10i4.3598

Authors

Adinda Noor Widowati
Resi Ariyasa Qadri
✉ Corresponding author: resi.ariyasa@pknstan.ac.id
Adita Queenola Larasati

DOI:

https://doi.org/10.33395/owner.v10i4.3598

Keywords:

Emission Intensity, Environmental Costs, Greenwashing, ROA, Tax Avoidance, Waste Performance

Abstract

Sustainability reporting in the Basic Materials sector may present a favorable environmental image, yet such disclosure does not always correspond to actual environmental performance. This study aims to predict and explain the effects of Environmental Costs, Emission Intensity, and Waste Performance on Greenwashing, as well as the economic consequences of Greenwashing for ROA and Tax Avoidance. Using a positivist quantitative approach, this study analyzes firm-year observations of Indonesian Basic Materials companies during 2021–2023. The data were collected from annual reports, sustainability reports, financial statements, PROPER ratings, and ESG databases. The sample was selected using purposive sampling and examined through panel data regression and Sobel mediation testing. The results show that Environmental Costs and Emission Intensity significantly increase Greenwashing, whereas Waste Performance has no significant effect. Greenwashing significantly reduces ROA and lowers GAAP ETR, indicating a higher level of Tax Avoidance. The mediation test further shows that Greenwashing only mediates the relationship between Environmental Costs and ROA. These findings indicate that environmental activities do not automatically represent substantive capabilities when corporate disclosure is not aligned with actual environmental performance. This study contributes by using the GRI-PROPER gap to assess Greenwashing in high-impact listed firms within a broader emerging market regulatory setting.

Keywords: Emission Intensity; Environmental Costs; Greenwashing; ROA; Tax Avoidance; Waste Performance.

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References

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