The Impact of Green Accounting and Integrated Reporting on Financial and Market Performance

The purpose of this study is to examine the impact of green accounting and integrated reporting on financial performance and market performance in basic materials and energy sector companies listed on the Indonesia Stock Exchange (IDX) and also determine whether these two policies can support the realization of the 2030 Sustainable Development Goals (SDG), specifically the 8th and 13th SDG goals. The final sample of this study used 74 samples with the observation period 2020-2022. Using the regression test tool, this study found that the implementation of green accounting and integrated reporting can be recognized as a strategic policy for basic materials and energy companies in Indonesia. By integrating environmental and sustainability considerations into their accounting practices and reporting frameworks, companies can improve their financial performance, market performance, and participate in realizing the 2030 SDG Goals.


Introduction
In recent years, green accounting and integrated reporting have become topics of frequent discussion by companies, investors, and regulators.The global economy continues to expand due to factors such as increased competition, technological advances, and greater regulation in response to financial and governance crises.As a result, the accounting profession has criticized the traditional financial business reporting model, arguing that the model does not meet the information needs of stakeholders when assessing a company's past and future performance [1].
In addition, society is starting to question the main goal of a company, which has traditionally been seen as creating wealth, because this narrow focus does not take into account value creation or equity for people, society, and the environment.The increase in the earth's temperature due to global warming triggers a lot of damage that can cause harm to the surrounding environment.In this case, the expansion of the industrial sector is considered to worsen the quality of the environment because it utilizes a lot of natural resources, both directly and indirectly in carrying out its business activities [2].Despite this phenomenon, industrial activity is an important element in supporting development in increasing economic growth in Indonesia.Therefore, it is expected companies that emit a lot of waste in Indonesia, especially those in the raw material and energy sectors to develop environmentally friendly business models and publicly disclose environmental costs in their financial statements.In this way, companies can also contribute to realizing the Sustainable Development Goals 1324 (2024) 012090 IOP Publishing doi:10.1088/1755-1315/1324/1/012090 2 (SDGs) that has been establish since 2015, one of them is realizing the 8 th SDG goal (decent work and economic growth) and 13 th SDG goal (climate action).Given the increasing importance of corporate involvement in environmental concerns and the preservation of natural resources, the field of accounting has the potential to play a role in supporting environmental conservation endeavors [3].In response to these issues, corporate reporting and green accounting continue to transform, and voluntary reporting is increasing to provide more useful information and enhances corporate transparency and accountability.
Green accounting is an accounting approach that considers the secondary expenses and advantages associated with economic activities, encompassing factors like the ecological and healthcare consequences of business choices and strategies [4].Green accounting involves the incorporation of environmental and societal elements into conventional accounting methods.By monitoring environmental costs, companies can identify areas where they can reduce waste, conserve resources, and lower their environmental impact, which can result in long-term cost savings, enhancing stakeholder engagement, and mitigate risks associated with environmental and social issues.This can lead to improved financial and market performance through increased profitability and reduced risks associated with environmental liabilities.
The Integrated Reporting concept has gained prominence as a strategic solution to overcome the limitations of financial reporting, according to the International Integrated Reporting Council [5].Integrated reporting, on the other hand, refers to the integration of financial and non-financial information in corporate reporting.Through environmental, social and governance (ESG) performance reporting, integrated reporting provides a more comprehensive view of a company's overall performance.Integrated reporting can also help companies communicate their sustainability strategy to stakeholders, which can enhance their reputation and brand value.By providing a more comprehensive view of a company's value creation process, integrated reporting can help investors and other stakeholders make informed decisions about a company's future.This can increase investor trust and support, which in turn can be translated into improved financial and market performance.
Based on the explanation above, the problem formulation in this research revolves around examining the potential impact of green accounting and integrated reporting on improving financial and market performance.And how accounting can help preserve the environment around.The research seeks to explore whether the application of environmentally-conscious accounting techniques and the embrace of comprehensive reporting frameworks can lead to favorable results concerning both financial and market performance.

Signaling Theory.
A framework in economics and social psychology that explains how individuals and organizations communicate information about themselves to others.Signaling theory is primarily focused on mitigating information asymmetry between two parties [6].It aims to enable better communication and understanding between the parties involved by using signals or indicators that convey reliable information.The theory is based on the idea that people often have asymmetric information about themselves, meaning that they know more about their own abilities, motivations, and intentions than others do.The signaling theory has a positive aspect in companies that provide accurate and reliable information can distinguish themselves from companies that do not have positive news to report.By sharing information about their condition and signaling good future performance, these companies can establish trust with the market.Conversely, companies with poor past financial performance may struggle to gain the trust of the market, even if they provide positive signals about their future prospects.2.1.2.Legitimacy Theory.Legitimacy pertains to the widely held belief that a company's actions align with the accepted standards, appropriateness, or suitability within a socially constructed framework of norms, values, beliefs, and definitions [7].The concept of legitimacy theory serves as a tool that aids organizations aspects.This, in turn, assists them in fulfilling their societal obligations, pursuing objectives and thriving in an ever-changing and uncertain business environment.Legitimacy theory provides a framework for understanding how organizations navigate the complex dynamics between societal expectations, organizational behaviour, and stakeholder perceptions, ultimately seeking to maintain and enhance their legitimacy in the eyes of the public.

Stakeholder Theory.
Companies must be able to recognize and understand the interests of stakeholders who can influence or be impacted by the company's goals and actions [8].Stakeholder theory, within the realm of business and organizational management, underscores the significance of taking into account the concerns and requirements of all parties involved when making decisions.In line with this theory, an organization's responsibility extends beyond just shareholders to encompass other stakeholders, including employees, customers, suppliers, communities, and the environment.Stakeholder theory asserts that taking into account the concerns of all parties involved can foster stronger relationships, enhance reputation, and lead to greater sustainability over the long term.A company that invests in employee training and development can improve employee satisfaction, retention, and productivity, which in turn can lead to higher customer satisfaction and financial performance.

Green Accounting.
Green accounting is an accounting framework that encompasses the secondary ramifications of economic activities, encompassing factors like the environmental effects and health outcomes stemming from planning and business decisions [4].By implementing green accounting, the company will be able to determine strategies to minimize costs related to the environment that occur due to the company's production activities.Green accounting can enhance the efficiency and effectiveness of resources that can be linked to the development of the company's environmental functions and have benefits for the environment [9].Green accounting has an essential role in the social responsibility of a company.Social responsibility has an impact on company growth and downsizing [10].

Integrated
Reporting.Integrated reporting is an evolving corporate reporting system that focuses on the organization's ability to create value in the short, medium, and long term [5].Integrated reporting provides an understanding that companies are not only focusing on profit number but also sustainable decisions and long-term goals so that stakeholders can measure how the company is actually performing [11].With the IR framework, companies can provide insight into the external environment that affects an organization, the resources and relationships used by the organization, and how the organization interacts with the external environment and capital.Moreover, integrated reporting aims to provide information on wide range of capital, which requires companies to disclose non-financial information beyond mandatory disclosures.In addition, the content of integrated reporting is broader than traditional financial reporting as it significantly increases the disclosure of non-financial information [12].

Financial Performance.
Financial performance refers to the evaluation of a company's financial health and how well it is utilizing its resources to generate profits and increase shareholder value.Financial performance is the outcome of a series of individual decisions made by management over time [13].This is typically measured by analysing a range of financial metrics, including revenue growth, profitability, liquidity, and solvency.By analysing a company's financial performance, stakeholders can make informed decisions about investing, lending, doing business with the company.
Companies also use financial performance metrics to monitor their own performance and make strategic decisions to improve their financial health and growth prospects.

Market Performance.
Stock market is a reflection of investors' expectations regarding future economic conditions, as demonstrated by their willingness to purchase stocks at high prices when they anticipate that companies will be profitable [14].Market performance refers to how well a particular financial market or asset class is doing over a specific period of time.It is typically measured by tracking changes in the value of a market index, which is a statistical composite that represents the performance of a group of securities that are traded on a particular exchange or market.Market performance can be positive or negative, depending on whether the index or asset class has gained or lost value during the period being measured.Market performance can be influenced by a wide range of factors, including economic indicators such as GDP, interest rates, inflation, and consumer sentiment, as well as geopolitical events, company earnings reports, and other factors that can impact investor sentiment and confidence.Investors use market performance data to help inform their investment decisions and to evaluate the overall health of the financial markets.

Green Accounting in Financial
Performance.Green accounting, also known as sustainable accounting, is a specialized approach to financial performance measurement that takes into consideration the environmental impact and sustainability of economic activities.Traditional financial accounting primarily focuses on economic performance, profit and loss, and the allocation of resources, but it often neglects the ecological and social costs associated with these activities.Green accounting enables organizations to conduct eco-efficiency analysis, which involves evaluating the relationship between environmental performance and financial performance.By measuring resource inputs and environmental outputs, organizations can identify areas where efficiency improvements can lead to both environmental benefits and cost savings.By disclosing green accounting in the annual report, the higher the quality of disclosure, which is expected to get a good response from stakeholders, and in the end, it may improve financial performance [15].Furthermore, companies that implementing green accounting are able to showcase strong environmental performance and have a positive impact on their financial performance [2].
Ha 1 : Green accounting implementation can improve financial performance.

Integrated Reporting in Financial
Performance.Integrated reporting is a reporting approach that goes beyond traditional financial reporting by providing a more comprehensive view of an organization's performance, considering not only its financial results but also its environmental, social, and governance (ESG) impacts.Integrated reporting provides a more holistic view of an organization's performance, it doesn't replace traditional financial reporting.Instead, it complements financial reporting by offering a broader context for financial results.When organizations effectively integrate financial and non-financial information, they can better demonstrate how their strategies, operations, and governance practices contribute to sustainable value creation, which ultimately can positively impact their financial performance over the long term.Based on the explanation above, by adopting integrated reporting can have indirect effects on corporate governance and performance improvement in companies [13].
Ha 2 : Integrated Reporting implementation can improve financial performance.

Green Accounting in Market
Performance.Firms that embrace green accounting techniques and showcase a dedication to sustainability have the potential to bolster their standing and increase the value of their brand.Investors and consumers are increasingly conscious of environmental issues, and companies with strong environmental performance are often seen as responsible and forward-thinking.This positive perception can attract socially responsible investors and environmentally conscious consumers, leading to increased market demand and higher market share.As market participants place greater importance on sustainability, companies that embrace green accounting may enjoy both financial and competitive advantages.Furthermore, companies that prioritize green accounting and demonstrate strong environmental performance may experience a positive and significant impact on their stock prices [16].
Ha 3 : Green accounting implementation can improve market performance.

Integrated Reporting in Market
Performance.Integrated reporting offers a clear and transparent picture of a company's strategy, risks, and performance across various dimensions.This transparency can enhance investor trust and confidence, as stakeholders gain insight into how the company manages its ESG-related challenges and opportunities.Increased transparency can lead to improved market perception and a more favorable reception by investors.Companies demonstrating a commitment to ESG factors through integrated reporting may be seen as more attractive investments for those seeking long-term returns.In addition, integrated reporting can positively influence market perception, investor decisions, stakeholder engagement, and overall market performance [17].
Ha 4 : Integrated reporting implementation can improve market performance.

Population and Sample
This study analyzes the effect of using green accounting and integrated reporting on the level of financial performance and market performance in companies with basic materials and energy sectors listed on the Indonesia Stock Exchange.The research observation year is 3 years, starting from 2020 to 2022.The companies that were sampled in this study were selected based on certain criteria (purposive sampling), including: 1. Basic materials and energy sector companies that have been listed on the Indonesia Stock Exchange from 2020 to 2022 continuously (never delisted and not under suspension) 2. The company has published an annual report for the period 2020-2022 3. The company participates in the Company's Performance Rating Assessment Program in Environmental Management (PROPER) in the period 2020-2022

Green Accounting.
Green accounting is used by companies to produce a quantitative assessment of the costs and impacts of environmental protection.Through the adoption of green accounting, organizations can minimize and eliminate expenses related to the environment, thus enhancing their overall environmental performance.Green accounting can be measured by the company's achievement in participating in PROPER program that have been established by the ministry of environment.The PROPER or known as the Program for Pollution Control, Evaluation, and Rating is a supervision program for industries that aims to encourage industrial compliance with environmental regulations.The PROPER performance evaluation system employs a five-color rating scheme, with assessments conducted sequentially, starting from the highest score of 5 represented by gold and descending to the lowest score of 1 indicated by black.

Integrated
Reporting.Integrated reporting can influence and enhance a company's ability to maximize long-term value.To further understand integrated reporting, it can be viewed through the lens of the International Integrated Reporting Framework (IIRF).This framework directs companies to report on a more comprehensive range of topics including corporate strategy, financial performance, governance, future development, and social and environmental impacts.As integrated reporting is an evolving practice, literature relating to its various aspects will continue to emerge.Therefore, this study focuses on the checklist developed by [18] and [19].However, there are a few individual disclosure items that are adjusted to fulfil the objectives of this study.The final disclosure checklist includes 38 items under the eight Content Elements of the IIRC Framework.The Checklist is shown in Appendix 1

Financial Performance.
Financial performance refers to the assessment of a company's financial health and profitability over a specific period.It provides insights into the company's profitability, efficiency, and effectiveness in utilizing its resources.By analyzing financial performance, companies can evaluate their own performance over time and compare their performance with similar companies operating in the same industry.Indicators commonly used to assess financial performance include performance accounting measures, return on assets (ROA), and return on equity (ROE) [20].In this research, the focus will be on the measurement of return on assets (ROA) as a key indicator of financial performance.ROA is a ratio that measures a company's profitability by assessing how efficiently it generates earnings from its assets.

Market Performance.
Market performance refers to the overall behavior and outcomes of a financial market or a specific segment of the market over a given period.Market performance is typically evaluated using various indicators such as stock prices, market indexes, market returns, trading volume, volatility measures, sector performance, and investor sentiment indicators.These indicators help investors, analysts, and policymakers understand the market's trends, behavior, and profitability, aiding in decision-making and assessing the effectiveness of investment strategies.In this study, the focus will be on the measurement of stock prices at the end of period (31 December) in the year of observation as a key indicator of market performance.By analyzing the price movements of individual stocks can provide insights into the performance of specific companies and sectors.   2 shows that, the results of testing green accounting (GA) on financial performance obtained the t-value of 2.639100 > t-table, namely 1.993464 and sig value.0.0102 < 0.05.It's meant this study supported Ha1, meaning that green accounting affects financial performance.Then, the results test of the integrated reporting (IR) on financial performance obtained a t-value of 3.015139 > t-table, namely 1.993464 and a sig value.0.0036 < 0.05.This value indicate that Ha2 is supported, which means that integrated reporting influences financial performance.3 shows that the results test of the green accounting (GA) on market performance obtained the t-value of 2.032849 > t-table, namely 1.993464 and sig value.0.0483 < 0.05.This result indicates that Ha 3 is supported, which means that green accounting related to market performance.And the results test of the integrated reporting (IR) on market performance obtained a t-value of 3.923589 > t-table, namely 1.993464 and a sig value.0.0003 < 0.05, This shows that Ha 4 is supported, its meant that integrated reporting influences market performance.

Green Accounting on Financial Performance.
The first hypothesis in this study indicates that green accounting has an impact on the financial performance of Basic Materials and Energy companies listed on the IDX for the 2020-2022 period.And based on the results of the analysis presented, the significance value between green accounting and financial performance is 0.0102 which is smaller than the significance level of 0.05 (0.0102 < 0.05).This implies a statistically significant relationship between green accounting and the financial performance of basic materials and energy companies.The implementation and disclosure of green accounting require thorough preparation due to the potential impact on a company's image in terms of disclosing its environmental activities.The public observes how companies conduct their operations, and this perception influences the company's legitimacy.Moreover, in legitimacy theory, when a company effectively manages its environmental practices and has a positive image, it tends to gain acceptance and support from society.With proper implementation and transparent disclosure, green accounting can contribute to enhancing a company's reputation and fostering a positive relationship with stakeholders and the wider community.Through clear reporting on their environmental achievements, companies can demonstrate their dedication to sustainability and gain the trust and support of various stakeholders, such as customers, investors, staff and regulatory bodies.Positive stakeholder relationships can lead to increased customer loyalty, investor confidence, market opportunities, and positively impacting financial performance.Numerous research studies have explored the intersection of green accounting and financial performance, yielding varied findings.One of these studies indicates that companies adopting green accounting practices are capable of demonstrating robust environmental performance, which, in turn, exerts a favorable influence on their financial outcomes [2].

Integrated Reporting on Financial Performance.
The second hypothesis in this study indicates that integrated reporting has an impact on the financial performance of Basic Materials and Energy companies listed on the IDX for the 2020-2022 period.And based on the results of the analysis presented, the significance value between integrated reporting and financial performance is 0.0036 which is smaller than the significance level of 0.05 (0.0036 < 0.05).This implies that there is a statistically significant relationship found between integrated reporting and the financial performance of basic materials and energy companies.Integrated reporting goes beyond traditional financial reporting to capture the broader value creation aspects of a company.When it comes to financial performance, integrated reporting provides a completer and more transparent picture by considering not only financial metrics but also non-financial factors that can impact financial outcomes.Integrated reporting focuses on long-term value creation rather than short-term financial gains.It encourages companies to consider ESG factors that can impact financial performance over time.By addressing sustainability and responsible business practices, companies can create sustainable value and mitigate risks that may impact their financial performance in the long run.This is in line with stakeholder theory which states that companies that are transparent about their corporate value through the report can provide positive signals to stakeholders.The previous studies about integrated reporting and financial performance suggest that the adoption of integrated reporting can have indirect effects on corporate governance and performance improvement in companies [13].
4.4.Green Accounting on Market Performance.The third hypothesis in this study indicates that green accounting has an impact on the market performance of Basic Materials and Energy companies listed on the IDX for the 2020-2022 period.And based on the results of the analysis presented, the significance value between green accounting and market performance is 0.0483 which is smaller than the significance level of 0.05 (0.0483 < 0.05).This implies that there is a statistically significant relationship found between green accounting and the market performance of basic materials and energy companies.Green accounting helps companies identify and manage environmental risks, such as regulatory changes, climate change impacts, and reputational risks.By effectively addressing these risks, companies can mitigate potential financial losses and enhance their stability.Firms that embrace green accounting methodologies can set themselves apart within the market.By showcasing their dedication to environmental sustainability, they have the potential to draw in environmentally aware consumers and secure a competitive edge.Green accounting practices can enhance the perceived value of a company in the eyes of investors.By effectively managing environmental risks and demonstrating a commitment to sustainability, companies may be seen as better positioned for long-term success and resilience.The importance of environmental sustainability grows and investors increasingly consider ESG factors, companies that prioritize green accounting and demonstrate strong environmental performance may experience positive effects on their market performance.This is in accordance with signaling theory which describes that by publishing information about the condition and value of the company can create a high level of trust in the capital market.This study is in line with previous findings which show that environmental performance has a positive and significant impact on stock prices [16].

Integrated Reporting on Market Performance.
The fourth hypothesis in this study indicates that integrated reporting has an impact on the market performance of Basic Materials and Energy companies listed on the IDX for the 2020-2022 period.And based on the results of the analysis presented, the significance value between integrated reporting and market performance is 0.0003 which is smaller than the significance level of 0.05 (0.0003 < 0.05).This implies that there is a statistically significant relationship found between integrated reporting and the market performance of basic materials and energy companies.Integrated reporting provides stakeholders, including investors, analysts, and regulators, with a more comprehensive understanding of a company's performance beyond traditional financial metrics.This is in accordance with signaling theory.It incorporates nonfinancial information, such as environmental, social, and governance (ESG) factors, enabling stakeholders to assess the company's long-term sustainability, risk management practices, and overall performance.In line with legitimacy theory, integrated reporting enables companies to differentiate themselves in the market by effectively communicating their sustainability practices, corporate values, and long-term strategy.This differentiation can attract environmentally and socially conscious customers, investors, and partners who value companies with a holistic approach to value creation.Companies that effectively disclose their ESG performance and commitment to sustainability may attract a broader range of investors, including those focused on ESG criteria.This increased interest can provide access to capital and potentially improve market performance by expanding the investor base and diversifying sources of funding.In line with stakeholder theory, by providing a comprehensive view of a company's performance, risk management practices, and alignment with sustainability, integrated reporting can positively influence market perception, investor decisions, stakeholder engagement, and overall market performance.The previous studies about integrated reporting and market performance revealed that integrated reporting contributes to an increase in firm value, and they put forward two channels through which integrated reporting enhances firm value: improved decision-making (real effect: internal) and enhanced information environment (capital market effect: external) [17].

Conclusion
The implementation of green accounting and integrated reporting is indeed recognized as a strategic policy for basic materials and energy companies in Indonesia.By integrating environmental and sustainability considerations into their accounting practices and reporting frameworks, companies can aim to improve their financial performance and market performance.Green accounting helps companies effectively measure and manage their environmental impact, leading to more sustainable practices that can positively influence financial outcomes.Integrated reporting, on the other hand, provides a comprehensive view of a company's financial, environmental, social, and governance performance, enabling stakeholders to make more informed decisions.Through the implementation of these strategic policies, companies can improve their standing, potentially appeal to investors and customers who value environmental responsibility, and moreover help Indonesia to realizing a goals of Sustainable Development Goals (SDG).
The findings of this study indicate that basic materials and energy companies in Indonesia, have successfully implemented green accounting and integrated reporting practices and experienced improvements in their financial and market performance.This improvement can occur both directly, through the effective management of environmental costs and risks, and indirectly, through enhanced reputation and public perception.The public tends to view companies positively that receive good ratings in the corporate performance appraisal program for environmental management conducted by the Ministry of Environment of the Republic of Indonesia.This positive perception indicates that companies with strong environmental management practices are perceived to have favorable financial and market performance prospects.The study highlights the importance of integrating environmental considerations into business operations and the potential benefits that can be derived from doing so in terms of financial and market performance and public perception.The successful implementation of integrated reporting practices has resulted in notable improvements in both the financial and market performance of companies.Integrated reporting, offering a comprehensive perspective on a firm's financial, environmental, social, and governance performance, empowers companies to efficiently convey their narrative of value creation to stakeholders and public perception.By including nonfinancial data in their reports, companies can showcase their dedication to sustainability, ethical business conduct, the pursuit of lasting value, and contribute to their financial and market performance.
For future research, it is recommended to explore other sectors and industries to assess the relevance and impact of environmental issues across various business types.This would provide a broader understanding of the potential environmental challenges faced by different sectors and enable the development of sector-specific strategies to address environmental concerns effectively.Organization's assessment of the likelihood and impact (0= no disclosure; 1= disclosing risks impacts only; 2= disclosing both risk and opportunity) 2 The spesific steps to mitigate or manage risk or opportunity (0=no disclosure; 1= disclose only risks or opportunities; 2= disclosing both risk and opportunity) 2

Strategy and Resource Allocation 6
Short, medium, long term strategic goals (0= no disclosure; 1= limited disclosure; 2= adequate disclosure) 2 Implementation plan to achieve strategic goals (0= no spesific description; 1= spesific actions taken) 1 Resource allocation plans (0= no disclosure; 1= disclosure) 1 How to measure achievements and outcomes for the short, medium and long term (0= no disclosure; 1= strategic goals are stated without relevant timeline; 2= strategic goals and timeline are listed) 2

Basic of Presentation 9
Material issues or determination (0= no disclosure; 1= disclosure) 2 Reporting boundary (0= no disclosure; 1= disclosure) 2 Significant frameworks and methods used to quantify or evaluate material matters (0= no disclosure; 1= disclosure) 1 Brief description of the process used to identify relevant matters, evaluate their importance and distill them down to material items (0= no disclosure; 1= limited disclosure; 2= adequate disclosure) Identification role of those responsible for governance and key personnel in identification and prioritization material matters (0= no disclosure; 1= disclosure) 1 Provides a link to a detailed explanation of the materiality determination process (0= no disclosure; 1= disclosure) 1 Totals 64 % of maximum 100%

4. 1 .
Research Results.Based on the results of mediation analysis using Eviews the following results are obtained:

Table 2 Multiple Linear Regression Test Results (Financial Performance)
7Table

Table 3 Multiple Linear Regression Test Results (Market Performance)
Key risk and opportunities (0= no disclosure; 1= disclosing risk only; 2= disclosing both risk and opportunities) 2