Do Independent Commissioners Boost the Effect of Profitability on Sustainability Disclosure? Evidence from Indonesian Palm Oil Companies

Abstract

Addressing sustainability risks in Indonesian palm oil companies depends on the quality of their governance. This is especially significant in light of increased scrutiny over corporate responsibility in the palm oil sector. The objective of this study is to investigate, under the Global Reporting Initiative (GRI) 2021 context, whether the presence of independent commissioners (representing corporate governance) moderates the influence of profitability on sustainability disclosure. We used moderated regression analysis on 47 observations from 13 listed palm oil companies in Indonesia, covering the period 2021 to 2024. The findings reveal that the moderating role of independent commissioners is muted. However, independent commissioners directly influence sustainability disclosure. This study provides further evidence on the direct impact of independence commissioners on the sustainability disclosure of palm oil companies. This result also confirms the agency, legitimacy, and signaling theories. The results highlight that improving corporate governance is critical to mitigating greenwashing risk and ensuring credible sustainability disclosure. Addressing sustainability issues through stronger governance practices will not only help restore public trust but also strengthen companies' global competitiveness. These insights are relevant for regulators and investors seeking accountability in the resource-based sectors.