Capital Structure Decisions and ESG Disclosure: Evidence from Energy Sector Companies in Indonesia

Abstract

This study examines the relationship between firm capital structure and environmental, social, and governance (ESG) disclosure in Indonesian energy-sector companies amid the capital-intensive energy transition. Using a quantitative panel-data design with 128 firm-year observations from 32 energy companies listed on the Indonesian Stock Exchange (IDX) during 2020–2023, ESG disclosure measures were manually constructed based on Global Reporting Initiative (GRI) indicators. Panel regression results reveal that the shareholders' equity ratio (SER) is positively associated with aggregate ESG (coef = 1.434, p < 0.01) and environmental disclosure (coef = 3.221, p < 0.01), but negatively with social (coef = -0.820, p < 0.05) and governance disclosure (coef = -0.820, p < 0.05). Total debt (TDA) is positively associated with governance disclosure (coef = 1.629, p < 0.10), while debt-based measures show no significant links to environmental or social dimensions. These findings demonstrate that the relationship between capital structure and ESG disclosure is dimension-specific. These findings suggest that greater equity-based financial flexibility may be associated with more extensive environmental reporting. Thus, managers should maintain balanced financing, and regulators should expand transition-finance access to align capital structures with sustainability goals.