The Effectiveness of Corporate Governance in Curbing Greenwashing: The Moderating Role of Profitability in Energy Sector Companies

Karunia Zuraidaning Tyas; Aning Fitriana; Anastasia Anggarkusuma Arofah; Neina Yanida Putri

doi:10.63922/ijevss.v5i04.6747

Karunia Zuraidaning Tyas Universitas Perwira Purbalingga
Aning Fitriana Universitas Perwira Purbalingga
Anastasia Anggarkusuma Arofah Universitas Perwira Purbalingga
Neina Yanida Putri Universitas Perwira Purbalingga

DOI: https://doi.org/10.63922/ijevss.v5i04.6747

Keywords: Corporate Governance, Energy Sector, Greenwashing, Profitability

Abstract

This study examines the effectiveness of corporate governance in curbing greenwashing and investigates the moderating role of profitability among energy sector companies listed on the Indonesia Stock Exchange. Using a quantitative explanatory design, the study analyzes 200 firm-year observations from 40 energy companies during 2020–2024 selected through purposive sampling. Data were obtained from annual and sustainability reports and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). Corporate governance was measured through independent commissioners, board size, audit committee size, and board meeting frequency, while profitability was proxied by Return on Assets and greenwashing by the discrepancy between ESG disclosure and environmental performance. The results indicate that corporate governance has a significant negative effect on greenwashing (β = −0.347), while profitability also has a significant negative effect (β = −0.218). Furthermore, profitability significantly moderates the relationship between corporate governance and greenwashing (β = −0.163), strengthening the negative relationship. The model explains 32.6% of greenwashing variance and demonstrates predictive relevance. These findings highlight the complementary roles of governance mechanisms and financial capacity in reducing symbolic sustainability disclosure within the Indonesian energy sector context.

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