The Impact of Climate Change and Environmental Cost Disclosure on Firm Performance

Abstrak

Currently, climate change and environmental costs are among the biggest issues in the world. This was reflected in the G20 Leaders Declaration in Bali in 2022, where leaders committed to Sustainable Development Goals (SDGs) to support welfare by reducing carbon emissions and preventing climate change. However, there is a lack of literature explaining the effect of climate change and environmental cost disclosure on 
firm performance and their impact on welfare. This paper investigates the effects of climate change and environmental cost disclosures on firm performance. The research used 61 samples from the energy sector that directly impacted climate change from 2016 to 2021. The research findings suggest that climate change disclosures can improve the performance and value of the firm, while environmental cost disclosure does not. Investors tend to view environmental costs as expenses that decrease net income and are indifferent to environmental cost disclosures, as these do not directly impact the firm's value.