How to cite:
V. Wiratna Sujarweni, Djoko Suhardjanto, Setianingtyas Honggowati,
Sri Hartoko. (2022). Disclosure Determinants of Hazardous Toxic
Waste in Indonesia. Journal Eduvest. Vol 2(7): 1.297-1.305
E-ISSN:
2775-3727
Published by:
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Eduvest – Journal of Universal Studies
Volume 2 Number 7, July, 2022
p- ISSN 2775-3735- e-ISSN 2775-3727
DISCLOSURE DETERMINANTS OF HAZARDOUS TOXIC
WASTE IN INDONESIA
1
V. Wiratna Sujarweni,
2
Djoko Suhardjanto,
3
Setianingtyas Honggowati,
4
Sri
Hartoko
1
Faculty of Economics and Business, Sebelas Maret University, Respati
Yogyakarta University;
2
Faculty of Economics and Business, Sebelas Maret
University,
3
Faculty of Economics and Business, Sebelas Maret University,
4
Faculty of Economics and Business, Sebelas Maret University, Indonesia
Email: [email protected], [email protected],
ABSTRACT
This study aims to examine the effect of Suppliers, Consumers,
community, Shareholders, and Employees on Hazardous Toxic
Waste Disclosures in Indonesia by compiling its index. This
study uses primary and secondary data. The primary data were
obtained by distributing the Hazardous Toxic Waste Disclosure
questionnaire to academics, environmental service officials,
suppliers, consumers, local communities, shareholders, and
company employees. Meanwhile, the secondary data were
obtained from the annual reports of manufacturing
companies, Management of Mineral, Gas, and Coal Mining, as
well as hospitals listed on the Indonesia Stock Exchange (IDX)
between 2012-2019. A purposive sampling technique was
used, and the independent variables include Suppliers,
Consumers, Community, Shareholders, and Employees
controlled by Company Size, and Profitability, while the
dependent variable is Hazardous Toxic Waste Disclosure. The
data were processed using the descriptive test and multiple
linear regression. The Stakeholder Theory was used to solve
the problem of low Hazardous Toxic Waste Disclosure in
Indonesia. The results showed 21 items of the Hazardous Toxic
Waste Disclosure index. In a previous study, Suppliers,
Consumers, Communities, and employees positively affected
V. Wiratna Sujarweni, Djoko Suhardjanto, Setianingtyas Honggowati, Sri Hartoko
Disclosure Determinants of Hazardous Toxic Waste in Indonesia 1.298
Hazardous Toxic Waste Disclosures. Meanwhile, shareholders
had a negative effect on the dependent variables
KEYWORDS
Toxic Hazardous Material Waste Disclosure, Toxic
Hazardous Material Waste Disclosure Index, Stakeholder
Theory, Voluntary Disclosure, Toxic Hazardous Material
Waste, Environtmental Disclosure.
This work is licensed under a Creative Commons
Attribution-ShareAlike 4.0 International
INTRODUCTION
The developing industrial activities are expected to improve the living standard of
the Indonesian population. However, they have both positive and negative impacts (Euler,
Krishna, Schwarze, Siregar, & Qaim, 2017). The positive impact includes producing goods
and services, job creation, and improving people's living standards. Meanwhile, the
negative impact consists of waste pollution, which causes damage to natural resources and
decreases life quality.
The cases of environmental damage in various parts of the world are caused by
companies that pay insufficient attention to the management of Hazardous Toxic Waste
produced (Ferronato & Torretta, 2019). The tragedy of environmental damage occurred in
parts of the world such as Japan, India, the Soviet Union, Nigeria, and Indonesia due to the
company's carelessness in managing Hazardous Toxic Waste. Therefore, the living
creatures become victims.
Companies are required to make improvements and maintain sustainability in the
future. The Indonesian government issued Law no. 40 of 2007 concerning Limited Liability
Companies (2007), regulating their obligation to perform economic, social, and
environmental responsibilities, better known as Corporate Social Responsibility (CSR).
CSR implementation is regulated in Government Decree no. 47 of 2012 concerning Social
and Environmental Responsibility of Limited Liability Companies (2012).
A survey conducted by the Indonesian Environmental Forum (WALHI) in 2015
reported that in 2011, 2012, and from January to March 2013, there were 107, 118, and 4
cases of environmental violations, respectively, the majority of which were caused by LB3.
The emergence of this conflict is caused by the low quality of the company's environmental
responsibility and disclosure of annual report (WALHI, 2015). Companies are under
pressure from various parties because of pollution, hence, it is essential to provide
transparent information about environmental activities.
The company's annual report is mainly utilized for decision-making by investors
and potential investors. Furthermore, they require as much information as possible,
including financial and non-financial data. (Osadchy et al., 2018) stated that the decision-
making process for investors and potential investors tends to invest in companies with a
good image, and business ethics can be obtained from environmental care actions
conducted by the company.
Figure 1.1 shows a graph of Hazardous Toxic Waste Disclosure in manufacturing,
mineral and coal companies, as well as hospitals listed on the IDX annual report between
2012 to 2019. The graph indicates a low and fluctuating dependent variable. The average
Hazardous Toxic Waste Disclosure in 2012, 2013, and 2014, was 26.98%, 19.11%, and
19.81%, respectively.
Eduvest – Journal of Universal Studies
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1.299 http://eduvest.greenvest.co.id
Furthermore, it was 21.15% in 2015 and became 22.82% in 2016,
Figure 1.1: Diagram of Hazardous Toxic Waste Disclosure of Manufacturing, Mineral,
Gas, and Coal Mining, and Hospital Companies on the IDX in 2012-2019
Source: Processed data (2021)
This Hazardous Toxic Waste disclosure report remains voluntary despite its
numerous benefits, such as creating a good impression, supporting company continuity,
increasing company legitimacy, and minimizing risk (Hahn & Lülfs, 2014).
There is a need for Hazardous Toxic Waste Disclosure research. The first reason
is that incorrect management of Hazardous Toxic Waste has caused significant
environmental damage. This is due to the company's low awareness of LB3 management
and low dependent variable in the annual report. Second, there is a relationship between
environmental Disclosure and the company's financial performance. Several studies were
conducted on CSR disclosure's effect on the company's financial performance (Xixi,
Tongkun, & Yecheng, 2022) showed that there is a positive effect of CSR disclosure on
the company's financial performance.
According to the Stakeholder Theory, (Vasi & King, 2012) discovered that
companies need to establish positive relationships with their stakeholders to build a positive
reputation by supplying Hazardous Toxic Waste information. Stakeholders are divided into
normative and derived. The normative type has a reciprocal relationship with the company.
They consist of suppliers, consumers, local communities, shareholders, and employees.
Meanwhile, derivative stakeholders do not have a reciprocal relationship and can
affect the company's reputation when ignored. Stakeholders, protests derivatives can affect
the stability and reputation of the company. The company's status can be changed to
normative stakeholders when managing its derivative counterpart. The derived
stakeholders consist of environmental activists, the press, and radical groups.
This study identifies factors influencing Hazardous Toxic Waste Disclosure by
using the basis of normative stakeholder theory. In terms of normative
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
2012 2013 2014 2015 2016 2017 2018 2019
Hazardous Toxic Waste Disclosure
V. Wiratna Sujarweni, Djoko Suhardjanto, Setianingtyas Honggowati, Sri Hartoko
Disclosure Determinants of Hazardous Toxic Waste in Indonesia 1.300
stakeholders, suppliers, customers, local communities, shareholders, and employees are
proxied by inventory turnover, total sales, environmental cost ratio, majority shareholders,
and employee productivity. Hazardous Toxic Waste Disclosure is valued using the
weighted index method, and the effect of the independent variable on the dependent is
controlled by Firm Size and Profitability.
The Vos viewer was searched, which led to obtaining an article from (Tanjung,
2021) about the Disclosure of hazardous materials, published in the United States. It
explained that various industries such as manufacturing, mining, coal, and petroleum in the
United States are required to disclose the total weight of hazardous waste generated
annually. A study on Disclosure of Waste was also conducted by (Yagi & Kokubu, 2018).
The company uses three items in the Disclosure of waste, namely the presence of waste
generated, time, and specificity. Meanwhile, the results of this study affect Company value.
Another study was conducted by (Rodrigo, Duran, & Arenas, 2016) on Disclosure of
Corporate Waste.
The measurement of total waste product divided by sales and the total waste
product divided by assets was used for Waste Disclosure. The study results showed that
Disclosure of Waste affects Cash Ownership. The previous study conducted by (Guesser,
Hein, Pfitscher, & Lunkes, 2015) on Disclosure of Waste used measurements by counting
the number of sentences and then assessing the depth level. The result of this study shows
that Disclosure of Waste influences Company Size.
(Plumlee, Brown, Hayes, & Marshall, 2015) defined Disclosure of Hazardous
Materials as the annual Disclosure of the weight of hazardous waste generated by the
industry in the United States. Another previous study is on Disclosure of Waste, which
focuses more on Hazardous Toxic Waste.
According to Government Regulation No. 22 of 2021, Hazardous Toxic Waste has
become an essential matter that should be managed directly. Previous studies have
established disclosure guidelines for waste in general, while others have analyzed Waste
Disclosure by measuring the number of words and the level of the disclosure's content.
Furthermore, there is also a Waste Disclosure measure with a quantitative value. This study
measures the Hazardous Toxic Waste Disclosure in detail through the manufacturing stages
of the weighted items.
The novelty of this study is compiling the Hazardous Toxic Waste Disclosure index
based on guidelines, previous studies, and opinions of normative stakeholders (Suppliers,
Consumers, Local Communities, Shareholders, and Employees). The Normative
Stakeholder Theory was used to solve the problem of low Hazardous Toxic Waste
Disclosure in Indonesia.
RESEARCH METHOD
The population in this study are manufacturing companies, mineral and coal
companies, as well as hospitals listed on the Indonesia Stock Exchange (IDX) from 2012
to 2019. A purposive sampling technique was used, where the sample was selected based
on predetermined criteria. The sample selection framework is based on the following
company criteria:
1. Companies selected as samples are manufacturers, mineral and coal, as well as
hospitals. This is based on the KLH statement that the producers of LB3 are
companies (Bisnis Indonesia, 2014).
2. The company publishes a complete annual report between 2012-2019.
Eduvest – Journal of Universal Studies
Volume 2 Number 7, July 2022
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The operational definition of the study variables is defined based on the observed
characteristics of the independent (Suppliers, Consumers, Local Communities,
Shareholders, Employees), control (Company Size, Profitability), and the dependent
variables (LB3 Disclosure).
To determine the independent effect on the dependent variable, a quantitative
analysis method was conducted using panel data. The data were processed using multiple
linear regression with the help of the Eviews program.
RESULT AND DISCUSSION
The results of the arrangement of Hazardous Toxic Waste disclosure items were
obtained from GRI, following Clarkson et al. (2008); Setiadi (2016); Suhardjanto et al.,
(2007); Suhardjanto & Choiriyah (2010); Wiseman (1982), and government policies,
namely Government Regulation no. 22 of 2021, Minister of Environment and Forestry
Regulation No. 55 of 2015, Minister of Environment and Forestry Regulation No. 63. Table
1.1 presents the LB3 disclosure items.
Table 1.1 Hazardous Toxic Waste Disclosure Items
No
Hazardous Toxic Waste Disclosure
items
Researcher
1
Type
Suhardjanto et al., (2007); Minister of
Environment and Forestry Regulation
No. 55 of 2015 LB3 Characteristic Test;
PP 22 the year 2021
2
Total weight by the type
Setiabudi (2016); GRI 4
3
Reduction efforts
Crakson et al., (2008); PP 22 year 2021
4
Storage
PP 22 the year 2021
5
Collection
PP 22 the year 2021
6
Transport information
Wiseman (1982); PP 22 the year 2021
7
Utilization
PP 22 the year 2021
8
Recycling
Crakson et al., (2008); Clarkson et al.,
(2013)
9
Processing
Clarkson et al., (2013); PP 22 the year
2021
10
Hoarding
PP 22 of 2021; Minister of Environment
and Forestry Regulation Number 63 of
2016 LB3 Hoarding Test
11
Disposal method
Wiseman (1982); Crakson et al., (2008);
Clarkson et al., (2013)
12
Hazardous Toxic Waste’s total
weight by disposal method
GRI4
13
Financing
PP 22 the year 2021
14
Percentage of Hazardous Toxic
Waste transported for international
shipments
GRI4
V. Wiratna Sujarweni, Djoko Suhardjanto, Setianingtyas Honggowati, Sri Hartoko
Disclosure Determinants of Hazardous Toxic Waste in Indonesia 1.302
No
Hazardous Toxic Waste Disclosure
items
Researcher
15
Management of Environmental
Pollution due to Hazardous Toxic
Waste
PP 22 the year 2021
16
Emergency Response System in
Hazardous Toxic Waste
Management
PP 22 the year 2021
17
coaching
PP 22 the year 2021
18
Supervision
PP 22 the year 2021
19
Total spill volume Hazardous
Toxic Waste
GRI4; Clarkson et al., (2013); Setiabudi
(2016)
20
Cause of Hazardous Toxic Waste
Clarkson, et al., (2013)
21
Hazardous Toxic Waste care
Crakson, et al., (2008)
Source: Processed data (2021)
The FGD results showed 21 items of Hazardous Toxic Waste Disclosure. The
participants thought these items were mandatory for Hazardous Toxic Waste producing
companies, but Disclosure remained voluntary. Furthermore, Hazardous Toxic Waste
Disclosures are used to provide additional information published in the company's annual
report (Reza & Ullah, 2019).
The hypothesis testing is used to analyze the influence of Suppliers, Consumers,
Community, Shareholders, and Employees on Hazardous Toxic Waste Disclosures. The
table below presents the results of multiple linear regression with panel data.
Table 1.2 Multiple Linear Regression Test Results Hazardous Toxic Waste Weighted
Disclosure Factors
Description
Coefficient
Sig
C
0.0811
0,2474
Supplier (X1)
0.0008
0,0097
Consumer (X2)
0,0176
0,0000
Local Community (X3)
0.1266
0,0039
Shareholders (X4)
-0.0009
0,0000
Employees (X5)
0,0107
0,0000
Company Size (X6)
-0,0179
0,0014
Profitability (X7)
-0,0002
0,1645
Fcount
2,4293
Sig F
0,0000
Adjusted R Square
0,1572
Source: Processed data (2021)
The results of multiple linear regression calculations using panel data with the
eviews 12 program produce the following equation:
Y=0.0811+0.0008X1+0,0176X2+0.1266X3-0.0009X4+0,0107X5-0,0179X6-
0,0002X7+e
The equation above explained that:
1) H1 states that the Supplier influences the Hazardous Toxic Waste Disclosure. The
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analysis shows that the value of sig tcount 0.0097 <0.05 is in an area where H0 is
rejected and Ha is accepted. This valie is significant, which means that Suppliers
influence LB3 Disclosure in manufacturing, mineral and coal companies, as well as
hospitals in IDX between 2012-2019. The effect is positive at 0.0008, and the H1
statement accepted
2) H2 states that consumers affect Hazardous Toxic Waste Disclosure. The analysis
shows that the sig tcount value of 0.0000 <0.05 is in an area where H0 is rejected and
Ha is accepted. This number shows a significant value, which means there is a
consumer influence on LB3 disclosures in manufacturing, mineral and coal companies,
as well as hospitals in IDX between 2012-2019. The effect is positive at 0.0176, and
the H2 statement is accepted.
3) H3 states that Local Communities influence Hazardous Toxic Waste Disclosures. The
analysis shows that the sig tcount of 0.0024 <0.05 is in an area where H0 is rejected
and Ha is accepted. This number shows a significant value, meaning that local
communities influence LB3 disclosures in manufacturing, mineral and coal companies,
as well as hospitals on the IDX between 2012 -2019. The positive effect is 0.1266, and
the H3 statement is accepted.
4) H4 states that Shareholders affect Hazardous Toxic Waste Disclosure. The test data
analysis shows that the sig tcount of 0.0000 <0.05 is in an area where H0 is rejected
and Ha is accepted. This number shows a significant value, which means that
shareholders (the majority) influence LB3 disclosures in manufacturing, mineral and
coal companies, and hospitals in IDX between 2012-2019. The effect is negative at
0.0009, and the H4 statement is accepted.
5) H5 states that employees affect Hazardous Toxic Waste Disclosure. The test data
analysis shows that the sig tcount of 0.0000 <0.05 is in the area where H0 is rejected
and Ha is accepted. This number shows a significant value, which means that there is
an employee's influence on LB3 Disclosure in manufacturing, mineral and coal
companies, as well as hospitals on the IDX between 2012-2019. The effect is positive
at 0.0107, and the H5 statement is accepted.
The multiple linear regression analysis results can be observed in the Adjusted R
square of 0.1573. This shows that the Disclosure of Hazardous Toxic Waste in
manufacturing, mineral and coal companies, as well as hospitals listed on the IDX between
2012 to 2019, is influenced by five variables, namely Suppliers, Consumers, Community,
Shareholders, and Employees, to the extent of 15.7230%. The remaining 84.2800`% is
influenced by other variables that have not been studied.
Environmental information is provided to suppliers, consumers, communities,
shareholders, and employees to ensure that the company is responsible for Hazardous Toxic
Waste management. It also shows that the company is reliable and capable of being
accountable to its stakeholders, minimizing risks.
There are no hidden obligations, and the company has proven its sustainability
prospects. The Hazardous Toxic Waste management is an environmental concern that
companies should perform (Yong, Lim, & Ilankoon, 2019). Organizations no longer have
responsibilities that rely on a single bottom line, namely the company's value (corporate
value), which is reflected only in its financial condition. Therefore, stakeholders need as
much information as possible for decision-making. Suppliers, consumers, communities,
shareholders, and employees have the power to promote companies to make more LB3
disclosures (Jouha, 2015).
This study uses the Majority Share Ownership variable, and the results have a
negative effect on Hazardous Toxic Waste Disclosure. This indicates the more majority
shareholders in the company, the fewer the names or groups that own shares. They
V. Wiratna Sujarweni, Djoko Suhardjanto, Setianingtyas Honggowati, Sri Hartoko
Disclosure Determinants of Hazardous Toxic Waste in Indonesia 1.304
promptly request information disclosure from management. Furthermore, the company
does not consider Disclosure in the annual report necessary.
The low majority ownership indicates that it is increasingly dispersed among
people or organizations (Hope, 2013). To eliminate information asymmetry, it is vital to
reveal the company's management of Hazardous Toxic Waste -related operations.
CONCLUSION
This study concluded that:
1. The results obtained indicate that Suppliers, Consumers, Local Communities, and
Employees positively affect Hazardous Toxic Waste Disclosure in manufacturing,
mineral and coal companies, and hospitals listed on IDX between 2012-2019.
Companies need to maintain good relations with Suppliers, Consumers, Local
Communities, and Employees to acquire a reputation by conducting Hazardous
Toxic Waste Disclosures. Furthermore, these variables can influence the
Disclosure of Hazardous Toxic Waste and have the power to encourage companies
to disclose more Hazardous Toxic Waste. Stakeholders with power have the
potential to influence the company's behavior to achieve its goals.
2. The results also indicate that the Majority Shareholder has a negative effect on
Hazardous Toxic Waste Disclosure in manufacturing, mineral and coal companies,
as well as hospitals listed on the IDX between 2012 to 2019. The distribution of
company ownership promotes the broader Disclosure of information. The spread
of company ownership enables management to disclose more relevant information
to meet the demands of various shareholders. This means the greater the percentage
of Share Ownership in the company, the fewer the individuals or organizations that
own the company, resulting in low demand for Hazardous Toxic Waste's
information disclosure. Management believes it is unnecessary to provide
Hazardous Toxic Waste information in the annual report and not have to pay for it
due to the company's high level of Majority.
These results provide practical, theoretical, and methodological implications.
1. Practical Implications
a. These results show that the Disclosure of Hazardous Toxic Waste companies in
Indonesia remains low. This is in accordance with the environmental damage
caused by the company's management activities. To govern the LB3 Disclosure of
corporations in Indonesia, transparent accounting rules are required. The results of
creating these items can be incorporated into the development of LB3 Disclosure
standards in Indonesia.
b. Hazardous Toxic Waste Disclosures can be influenced by a company's interactions
with normative stakeholders. A company's ultimate purpose is to provide other
stakeholders with the information they need for making decisions, hence, to fulfill
this, companies need to establish good cooperation with normative stakeholders.
c. There is an information gap between expectations and realization of Hazardous
Toxic Waste Disclosure, hence, companies need to disclose Hazardous Toxic
Waste, and stakeholders could acquire more information in addition to financial
data for making investment decisions.
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