Beyond Compliance: How Csrd Shapes Profitability In Indonesia’s Sharia Mining

Abstract

This paper investigates the influence of green accounting and Corporate Social Responsibility Disclosure (CSRD) on the profitability of mining companies listed in the Jakarta Islamic Index (JII). The research is motivated by increasing global attention to sustainability and the limited evidence linking environmental practices to financial performance, particularly in Sharia-compliant firms in Indonesia’s mining sector. The study adopts a quantitative descriptive approach using secondary data from annual and sustainability reports of 10 mining firms listed in the JII. The variables include PROPER scores and environmental cost ratios for green accounting, GRI-based disclosure indices for CSRD, and Return on Assets (ROA) for profitability. Data analysis was performed using panel data regression (common effects model), supported by classical assumption tests and model selection diagnostics. The findings reveal that green accounting and environmental costs do not have significant effects on profitability, while CSRD has a statistically significant negative impact on ROA. These results imply that sustainability disclosures, if not integrated strategically, may impose short-term costs without immediate financial returns. The results suggest that companies should go beyond compliance by embedding environmental and social practices into their business models to enhance long-term value. Regulators should provide clearer guidelines and support mechanisms to align sustainability practices with financial outcomes. The study emphasizes the importance of balancing profitability with accountability in Sharia-compliant businesses. This study is among the first to simultaneously assess green accounting, environmental costs, and CSRD within the context of Sharia-compliant mining firms in Indonesia using panel data. It contributes to narrowing theoretical and empirical gaps on the sustainability-profitability nexus, particularly in Islamic financial contexts where ethical dimensions intersect with corporate performance.