Green Accounting, Carbon Disclosure, and Financial Reporting Quality in Indonesian Energy Firms

Abstract

Environmental accounting can support corporate accountability, but its financial associations depend on how practices and disclosures are measured. This study examines financial reporting quality as an intermediary between green accounting practice, carbon accounting disclosure, and sustainable financial performance in Indonesian energy firms. The archival design covers 27 companies and 108 firm-year observations during 2022–2025, analyzed using partial least squares structural equation modeling. The reported estimates associate green accounting practice with reporting quality (β = 0.536, p < 0.001) and carbon disclosure with reporting quality (β = 0.306, p = 0.013). Reporting quality and carbon disclosure are positively associated with financial performance (β = 0.333, p = 0.002; β = 0.346, p = 0.004, respectively). The direct green accounting association is not significant (β = 0.213, p = 0.112). Its indirect association through reporting quality is significant (β = 0.178, p = 0.002), whereas the corresponding carbon disclosure association is not (β = 0.102, p = 0.053). However, conflicting discriminant-validity diagnostics and pooled repeated observations constrain interpretation. The results indicate a provisional reporting-quality pathway rather than an established causal mechanism. The study distinguishes corporate financial outcomes from social welfare and identifies the additional workforce and community evidence needed to assess whether environmental accountability supports an inclusive energy transition.