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Unpacking Environmental, Social, and Governance Score Disparity: A Study of Indonesian Palm Oil Companies

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  • Iwan Suhardjo

    (Department of Accounting and Information System, University of Canterbury, Christchurch 8041, New Zealand
    Department of Accounting, Faculty of Management and Business, Universitas Internasional Batam, Kota Batam 29426, Indonesia)

  • Chris Akroyd

    (Department of Accounting and Information System, University of Canterbury, Christchurch 8041, New Zealand)

  • Meiliana Suparman

    (Department of Accounting, Faculty of Management and Business, Universitas Internasional Batam, Kota Batam 29426, Indonesia)

Abstract

This study investigates the inconsistencies in ESG scores assigned by different rating agencies. Focusing on two Indonesian palm oil companies, this paper examines the link between their reported sustainability performance and the resulting ESG scores. This study employs content analysis to assess how the companies disclose information around double materiality, stakeholder engagement, and certifications. Additionally, the methodologies used by two rating agencies are reviewed to identify potential misalignments. The analysis reveals discrepancies in the ratings, suggesting factors like differences in the level of engagement with each company and scoring methodologies might be at play. This highlights the need for standardized sustainability reporting and more transparent rating methodologies within the palm oil industry. While limited to two companies and two agencies, the findings can inform efforts to improve transparency both in sustainability practices and scoring methodologies. This would ultimately lead to more reliable ESG scores, benefiting all related stakeholders. To goal of this study is to promote responsible practices in the palm oil industry by emphasizing the impact of reporting practices.

Suggested Citation

  • Iwan Suhardjo & Chris Akroyd & Meiliana Suparman, 2024. "Unpacking Environmental, Social, and Governance Score Disparity: A Study of Indonesian Palm Oil Companies," JRFM, MDPI, vol. 17(7), pages 1-16, July.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:296-:d:1433295
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    References listed on IDEAS

    as
    1. Lingxiao Yan, 2021. "Indonesian palm oil," Nature Climate Change, Nature, vol. 11(7), pages 559-559, July.
    2. Nicola Raimo & Alessandra Caragnano & Marianna Zito & Filippo Vitolla & Massimo Mariani, 2021. "Extending the benefits of ESG disclosure: The effect on the cost of debt financing," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1412-1421, July.
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