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CHAPTER I INTRODUCTION
A. Background
One of major principles that is most prominent at the present time is sustainability. Sustainability has recently become very important for businesses,
from large businesses into small businesses. One of the focus sustainanability concept in businesses is that company cannot separated from the society and the
environment. The society and the environment is classify as involuntary stakeholders, because the society and the environment cannot be able to make
choice to be not become stakeholder. Stakeholder become aware of sustainability development regarding the
United Nation schedule agenda of sustainability development for 2030. According to Jeffrey 2015 describe sustainable development is the way
looking the world with focus on interlinkages of social, economic and environmental change and describe the shared aspiration also combine the
growth of economic, social regulation and environmental sustainability. Many stakeholder try to reach sustainability development by practice sustainability
aspect in their business and disclose the sustainbility reporting. Since 1990s, the number of companies disclosing information on their
environmental, social and governance performance has grown significantly. For
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many large multinational companies, sustainability reporting has become a mainstream phenomenon.
According to McKinsey Survey 2011, 76 percent of CEOs consider that strong sustainability performance contributes positively to their businesses
in the long term. Companies are capitalizing on local conditions and shaping their business strategies to accommodate constraints on natural resources in a
way that allows them to develop innovative new products, services, and business models. This also provides opportunities to increase companies growth,
profitability, and add societal value. McKinsey Global Survey results 2011 Three general aspect of sustainability reporting is economic,
environmental and social or as we know as triple bottom line. Due the long term goal and short term profit many company only focus in the economic
performance and forget their environmental and social aspect that‟s why there
are various cases regarding the environmental and society aspect . One of environmental and social issues happened in Negeria, when
Shell began oil production in 1958. The problem occur in 1960 and the United Stated district cort just settle down the problem in 2009. Oil drilling has had a
devastating impact on the region‟s environment. Oil spills, gas flaring and deforestation have stripped the land of its environmental resources, destroying
the subsistence farming and fishing based economy of the Ogoni. In 1990 the local citizens founded Movement for the survival Ogoni
people MOSOP a human rights group to fight against Shell but Shell make a
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agreement with the Nigerian Government to fight back Ogoni people by military dictatorship and did physical violence to Ogoni people .
Radio Canada programme Zone Libre published the news that Walmart was using underage worker child at two factories in Bangladesh. 89 Children
aged 10-14 years old were found to be working in the factories for less than 50 a month making products of the Walmart brand for export to Canada. Cristina
A. et al, 2013 Developing a good environmental and social reputation can contribute to
a willingness among customers and investors to pay a price premium, which directly affects the company‟s bottom line. According to a Harvard Business
School study, companies that has good performance in environmental and social is outperform the companies that has weak performance in environmental
and society. Figure 1.1
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There is an increasing expectation from stockholders and customers that companies report how their performance work with sustainability. This
Phenomenon happened because stockholders increase their awareness not only about the financial issues of the company but also about the social and
environmental impacts posed by the company in running its activities. 5,000 investors in 29 countries accessed more than 50 million
Environmental and Social performance indicators in the Bloomberg platform and 29 percent increase over the previous year Bloomberg, 2010
.
The sustainability reporting framework such as Global Report Initiative GRI and
Carbon Disclosure Project CDP have become important tools to informed investor, so investor can make investment decision.
Recently, businessmen and academic researchers increase their interest levels in sustainability report. Sustainability report is used by companies to
measure, to disclose, and to be accountable to internal and external stakeholders with regard to their environmental, social, economic and organizational
performance. Company that that perform better in economically are expected to
disclose more about sustainable development Roberts, 1992. The researcher interested to make a research and find out that company with good operating
performance are likely to have incentive to make environmental and social performance disclosure.
There are research gap from the previous research since there are lot of different approach and different result found by previous research such as
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positve and negative correlation between profitability, leverage and size of board commissioners toward sustainability disclosure. Based on previous
research, researcher want to continue the research and focused the research into 3 independent variable that will influence to sustainability reporting disclosure.
The thesis title is :
“ The Impact of Profitability, Leverage and Size of Board of Commissioners toward Sustainability Reporting Disclosure Study of
Indonesian Companies that Participated Sustainability Reporting Award 2012 until 2015
B. Problem Formulation
