The Mediating Role of Green Innovation and Investor Sentiment in Climate Related Risks on Sustainability Reporting: Evidence from the Indonesian Context




climate related risks, sustainability reporting, green innovation, investor sentiment


Objective: The purpose of this research is that companies must consider the impact that occurs on transition risks or physical risks and then need to know opportunities in risk mitigation efforts, so that it is hoped that there will be a need for opportunities from risks related to climate change. impact on how investors react and the innovations that will be created.


Methodology: Sample criteria are financial sector companies and companies that have completed sustainability reporting. This research collected 430 data from 740 companies that met the criteria. Data was collected from the 2021-2022 sustainability report.


Results: The results of this analysis provide important insights into the role of green innovation and Investor Sentiment in the relationship between Climate Change Related Risks and sustainability reporting.


Conclusion: These conclusions can help companies understand the factors that contribute to the relationship between Climate-related risks and sustainability reporting, as well as the potential impact of green innovation and investor sentiment. The implementation of sustainability reporting is expected to encourage companies to communicate sustainable practices, environmental performance, social impacts and corporate governance more transparently to stakeholders. This strategy will create a higher level of transparency in the company's operations and impact. There are several important implications for companies and practitioners when designing business strategies that focus on sustainability.


Adams, C. (2016). Environmental, Social and Governance (ESG) risk, strategy, corporate reporting and board oversight: interviews with Board Directors. In Proceedings of the 20th Conference of the Environmental and Sustainability Management Accounting Network (EMAN) (pp. 9–16).

Azapagic, A. (2004). Developing a framework for sustainable development indicators for the mining and minerals industry. Journal of Cleaner Production, 12(6), 639–662.

Bezabih, M., & Sarr, M. (2013). Risk Preferences and Environmental Uncertainty: Implications for Crop Diversification Decisions in Ethiopia Risk Preferences and Environmental Uncertainty: Implications for Crop Diversification Decisions in Ethiopia *.

Broadbent, P., Thomson, R., Kopasker, D., McCartney, G., Meier, P., Richiardi, M., McKee, M., & Katikireddi, S. V. (2023). The public health implications of the cost-of-living crisis: outlining mechanisms and modelling consequences. The Lancet Regional Health - Europe, 27, 100585.

Chen, H. Y., & Yang, S. S. (2020). Do Investors exaggerate corporate ESG information? Evidence of the ESG momentum effect in the Taiwanese market. Pacific Basin Finance Journal, 63.

Cuomo, M. T., Caprino, R. M., Genovino, C., & Tortora, D. (2020). Climate change, environmental auditing, and corporate/brand strategy. Sustainable Branding: Ethical, Social, and Environmental Cases and Perspectives, 115–127.

Dhasmana, S., Ghosh, S., & Kanjilal, K. (2023). Does investor sentiment influence ESG stock performance? Evidence from India. Journal of Behavioral and Experimental Finance, 37.

Dos Santos, R. P., De Almeida, N. C. D. A., De Oliveira, L. C., Pacheco, C. S. G. R., & Moreira, M. B. (2023). A TUTELA AMBIENTAL DE PALEOECOSSISTEMAS DO RIO SÃO FRANCISCO/BRASIL À LUZ DO DIREITO AMBIENTAL. Revista de Gestão Social e Ambiental, 17(9), e04094.

Freeman, R. E., & David, L. R. (1983). Stockholders and Stakeholders: A New Perspective on Corporate Governance. California Management Review, 25(3), 88–106.

Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & ... (2010). Stakeholder theory: The state of the art.

Gede, I., & Wicaksana, W. (n.d.). Tantangan Geoekonomi Global dan Prospek Integrasi Ekonomi ASEAN.

Gill, J. C. (2017). Geology and the Sustainable Development Goals. In Episodes (Vol. 40, Issue 1, pp. 70–76).

Hoepner, A. G. F., & Schneider, F. I. (2022). EU Green Taxonomy Data – A First Vendor Survey. The Economists’ Voice, 0(0), 221–234.

In, S. Y., Weyant, J. P., & Manav, B. (2022). Pricing climate-related risks of energy investments. Renewable and Sustainable Energy Reviews, 154.

Jacobsen, B. (2013). Institutional investor support for climate change resolutions: A new challenge to capitalism or co-opted activism? Critical Studies on Corporate Responsibility, Governance and Sustainability, 5, 279–308.

Kautsarina, Hidayanto, A. N., Anggorojati, B., Abidin, Z., & Phusavat, K. (2020). Data modeling positive security behavior implementation among smart device users in Indonesia: A partial least squares structural equation modeling approach (PLS-SEM). Data in Brief, 30, 105588.

Keleş, E., & Çetin, A. (2018). Corporate Social Responsibility, Investor Sentiment, and Stock Returns. In Accounting, Finance, Sustainability, Governance and Fraud (pp. 443–462). Springer Nature.

Kennedy, P. S. J., Sutrasna, Y., & Haetami, H. (2022). Geo-ekonomi: Dampak Terbentuknya Pakta Trilateral AUKUS terhadap ASEAN. Journal of Business and Economics Research (JBE), 3(2), 108–116.

Kumar, A., & Dwidvedi, A. K. (2023). The Development and Effects of Environmental Law on Green Governance. Journal of Law and Sustainable Development, 11(6), e1182.

Laplume, A. O., Sonpar, K., & Litz, R. A. (2008). Stakeholder theory: Reviewing a theory that moves us. In Journal of Management (Vol. 34, Issue 6, pp. 1152–1189).

Li, D., Huang, M., Ren, S., Chen, X., & Ning, L. (2018). Environmental Legitimacy, Green Innovation, and Corporate Carbon Disclosure: Evidence from CDP China 100. Journal of Business Ethics, 150(4), 1089–1104.

Li, D., Tang, F., & Jiang, J. (2019). Does environmental management system foster corporate green innovation? The moderating effect of environmental regulation. Technology Analysis and Strategic Management, 31(10), 1242–1256.

Mappong, Z. (2023). Regulation on the Fund of Corporate Social and Environmental Responsibility. Revista de Gestão Social e Ambiental, 17(9), e03675.

Mikkelsen, B. (2012). Methods for Development Work and Research: A New Guide for Practitioners. In Methods for Development Work and Research: A New Guide for Practitioners.

Nitescu, D. C., & Cristea, M. A. (2020). Environmental, social and governance risks-New challenges for the banking business sustainability. Amfiteatru Economic, 22(55), 692–706.

O’Dwyer, B., & Unerman, J. (2020). Shifting the focus of sustainability accounting from impacts to risks and dependencies: researching the transformative potential of TCFD reporting. Accounting, Auditing and Accountability Journal, 33(5), 1113–1141.

Peng, L. S., & Isa, M. (2020). Environmental, social and governance (Esg) practices and performance in shariah firms: Agency or stakeholder theory? Asian Academy of Management Journal of Accounting and Finance, 16(1), 1–34.

Rahman, M. A., Ahmad, R., & Ismail, I. (2022). Does the US regional greenhouse gas initiative affect green innovation? Environmental Science and Pollution Research, 30(6), 15689–15707.

Sacconi, L. (2011). A Rawlsian View of CSR and the Game Theory of its Implementation (Part I): the Multi-stakeholder Model of Corporate Governance. Corporate Social Responsibility and Corporate Governance, 157–193.

Shahzad, M., Qu, Y., Rehman, S. U., & Zafar, A. U. (2022). Adoption of green innovation technology to accelerate sustainable development among manufacturing industry. Journal of Innovation & Knowledge, 7(4), 100231.

Wang, G., Yu, G., & Shen, X. (2021). The effect of online environmental news on green industry stocks: The mediating role of investor sentiment. Physica A: Statistical Mechanics and Its Applications, 573.

Wang, J., Ma, M., Dong, T., & Zhang, Z. (2023). Do ESG ratings promote corporate green innovation? A quasi-natural experiment based on SynTao green Finance’s ESG ratings. International Review of Financial Analysis, 102623.

Wen, J., & Song, B. (2017). Corporate ethical branding on YouTube: CSR communication strategies and brand anthropomorphism. Journal of Interactive Advertising.

Zhang, Y., & Li, X. (2022). The Impact of the Green Finance Reform and Innovation Pilot Zone on the Green Innovation—Evidence from China. International Journal of Environmental Research and Public Health, 19(12).

Zhao, Y., Zhao, Z., Qian, Z., Zheng, L., Fan, S., & Zuo, S. (2023). Is cooperative green innovation better for carbon reduction? Evidence from China. Journal of Cleaner Production, 394, 136400.




How to Cite

Siregar, I. F., Ismail, T., Taqi, M., & Soleha, N. (2023). The Mediating Role of Green Innovation and Investor Sentiment in Climate Related Risks on Sustainability Reporting: Evidence from the Indonesian Context. Journal of Law and Sustainable Development, 11(11), e1958.