SUSTAINABILITY REPORT AS AN INDICATOR OF INVESTMENT DECISION: AN EMPIRICAL STUDY IN THE BANKING SECTOR

Abstract

ABSTRACT

In many industries, including banking, sustainability is becoming an increasingly important concern. In this case, sustainability reports become an important instrument for companies to demonstrate their dedication to economic, social and environmental responsibility. The purpose of this study is to assess how sustainability reports affect investment decisions made by banks listed between 2020 and 2023 on the Indonesia Stock Exchange. The findings of this study reveal that disclosure of information on economic and social performance significantly and positively impacts investment decisions, while environmental disclosure does not appear to have a significant influence. This indicates that investors prioritize the economic performance and social responsibility of banks when making investment decisions. As a result, banks that are more open and transparent in their sustainability reports, especially regarding economic and social factors, are likely to be more attractive to investors. This increased transparency increases the attractiveness of investing in the banking sector as a whole. The results highlight a clear trend that investors are increasingly likely to value economic and social disclosures over environmental disclosures, emphasizing the importance of effective sustainability reporting. By clearly communicating their initiatives in these areas, banks can build greater trust with investors and strengthen their competitiveness in the market. This study underscores the need for banks to refine their sustainability reporting practices to better align with investor priorities, which in turn can increase investment attractiveness. In short, a focus on transparent communication of economic and social aspects in sustainability reports can position banks favorably in the eyes of potential investors, thereby driving increased investment interest in the sector.

Keywords: sustainability report, investment decision, economic, social, environmental