TY - JOUR
T1 - The sustainability awareness of banking institutions in Indonesia, its implication on profitability by the mediating role of operational efficiency
AU - Anis, Idrianita
AU - Gani, Lindawati
AU - Fauzi, Hasan
AU - Hermawan, Ancella Anitawati
AU - Adhariani, Desi
N1 - Funding Information:
This paper is a development of papers entitled “Sustainability Awareness of Banking Institutions: A proposed corporate sustainability management (CSM) Model” and “Sustainability Awareness of Banking Institutions in Indonesia and Its Implications for Operational Efficiency” (Paper in Indonesian). The first paper was presented at the 6th International Conference on Sustainability Practitioners (November 12, 2021), organized by the Faculty of Economics and Business, Airlangga University, and awarded as The 1st Best Paper. The second paper was presented at “Financial System Stability Scientific Work Competition – LKISSK Bank Indonesia 2021” (December 2021) and was awarded 2nd Winner. Due to the paging policy for publications, the full version of the SGOV model and SGOV index are provided as supplementary material that can be accessed via a link; https://drive.google.com/file/d/1o80BaH4YVd4duQEbv6nO_-wL7YyOhOam/view?usp5sharing . The authors acknowledge that the supplementary material provided is not for review by the AJAR editor. This research was funded by The Institute for Research and Community Service, Universitas Trisakti. The authors acknowledge that this research is part of the author's unpublished Ph.D. dissertation. The authors thank Prof. Sidharta Utama, Ph.D., Prof. Dr. Irwan Adi Eka Putra, Setio Anggoro Dewo, Ph.D., and Dr. Chairul D. Djakman, for their assistance with specific techniques and comments that significantly improved the manuscript.
Publisher Copyright:
© 2023, Idrianita Anis, Lindawati Gani, Hasan Fauzi, Ancella Anitawati Hermawan and Desi Adhariani.
PY - 2023
Y1 - 2023
N2 - Purpose: This study aims to propose a solution to accelerate financing support low carbon (circular economy) transition. The authors developed a sustainability governance (SGOV) model and a sustainability governance (SGOV) index as a proxy for the diffusion of sustainability innovation. This study investigates the effect of SGOV practices on profitability with the mediating role of operational efficiency. Design/methodology/approach: The SGOV index consists of 32 and 122 sub-items, constructed using content analysis of annual and sustainability reports published by banks listed on the Indonesia Stock Exchange (IDX) from 2010 to 2020 (404 bank-year observations). Findings: Banks are at a moderate level of sustainability innovation. They are prioritizing the balance aspects of financial, social and environmental. SGOV practice negatively affects profitability. However, operational efficiency plays a positive mediating role that is robust. Research limitations/implications: The measurement of the SGOV index uses criteria that have not been tested in previous studies. There is the potential subjectivity in interpreting qualitative data, although this has been minimized by cross-checking the analysis of five raters. Practical implications: This study gives feedback for the Indonesia sustainable finance (SF) journey phase I to proceed into SF journey phase II. Social implications: The SGOV model can be applied in other industry sectors to know the readiness for entering low carbon (circular economy) transition. Originality/value: The uniqueness of the scoring technique assuming a step-by-step innovation model to sustainable finance.
AB - Purpose: This study aims to propose a solution to accelerate financing support low carbon (circular economy) transition. The authors developed a sustainability governance (SGOV) model and a sustainability governance (SGOV) index as a proxy for the diffusion of sustainability innovation. This study investigates the effect of SGOV practices on profitability with the mediating role of operational efficiency. Design/methodology/approach: The SGOV index consists of 32 and 122 sub-items, constructed using content analysis of annual and sustainability reports published by banks listed on the Indonesia Stock Exchange (IDX) from 2010 to 2020 (404 bank-year observations). Findings: Banks are at a moderate level of sustainability innovation. They are prioritizing the balance aspects of financial, social and environmental. SGOV practice negatively affects profitability. However, operational efficiency plays a positive mediating role that is robust. Research limitations/implications: The measurement of the SGOV index uses criteria that have not been tested in previous studies. There is the potential subjectivity in interpreting qualitative data, although this has been minimized by cross-checking the analysis of five raters. Practical implications: This study gives feedback for the Indonesia sustainable finance (SF) journey phase I to proceed into SF journey phase II. Social implications: The SGOV model can be applied in other industry sectors to know the readiness for entering low carbon (circular economy) transition. Originality/value: The uniqueness of the scoring technique assuming a step-by-step innovation model to sustainable finance.
KW - Implementation
KW - Integration
KW - Operational efficiency
KW - Profitability
KW - Sustainability governance
KW - Sustainability intention
UR - http://www.scopus.com/inward/record.url?scp=85161064428&partnerID=8YFLogxK
U2 - 10.1108/AJAR-06-2022-0179
DO - 10.1108/AJAR-06-2022-0179
M3 - Article
AN - SCOPUS:85161064428
SN - 2459-9700
VL - 8
SP - 356
EP - 372
JO - Asian Journal of Accounting Research
JF - Asian Journal of Accounting Research
IS - 4
ER -
