The biodiversity disclosure component of this study is based on a 5-year dataset (2019–2023), selected to capture trends and variations in biodiversity-related reporting among companies operating in Indonesia. Given the relatively underdeveloped and inconsistent nature of biodiversity disclosures compared to ESG reporting, the use of a multi-year period allows for a more comprehensive examination of disclosure frequency, content, and alignment with established reporting standards.

Two distinct datasets were constructed for this purpose:

This dataset consists of 30 Indonesian companies selected based on their strong ESG performance in 2023, as identified by low ESG risk scores in the Sustainalytics ESG-Leader Index. These companies were included to examine the extent to which leading ESG performers disclose biodiversity-related information. The sample provides insights into whether broader ESG leadership is associated with meaningful biodiversity transparency (Figure 1).

A separate dataset was developed to assess biodiversity disclosure among financial institutions, based on their strategic influence in directing capital flows and shaping environmental outcomes. Financial institutions, including banks, insurers, and investment firms—play a critical role in advancing biodiversity-related accountability due to their ability to integrate nature-related risks and dependencies into lending and investment decisions. As emphasized by the Taskforce on Nature-related Financial Disclosures (TNFD) and the EU Sustainable Finance framework, the financial sector is central to embedding biodiversity considerations into corporate decision-making and risk governance (CDSB, 2021; EU, 2024).

The dataset includes:

The asymmetric sample sizes (Saraswati et al., 2024; Jørgensen et al., 2022; Aggarwal and Kadyan, 2014) are a direct result of limitations in the availability of complete and verifiable sustainability or integrated reports during the study period. Rather than imposing artificial balance across groups, the sampling strategy prioritized data quality and inclusion of only those firms with publicly accessible, relevant biodiversity disclosures (Figure 1).

Based on the methodology by Zu Ermgassen et al. (2022) to assess Fortune 100 companies, in the process data collection was carried out involving the acquisition and analysis of sustainability reports from selected companies.

The sustainability reports from each selected company for the years 2019–2023 were obtained for the analysis. In this step, we checked whether the companies have published their sustainability reports.

A threefold analysis was conducted on each sustainability report to assess the companies' biodiversity-related disclosures:

The data enabled both qualitative and quantitative assessments of biodiversity integration into corporate sustainability strategies.

Data used in this study are using the publicly available in sustainability reports and nor any human participants are involved in this study for procuring the data. The frequency and contextual integration of biodiversity information were analyzed descriptively over 5 years using Microsoft Excel.

Following the biodiversity disclosure analysis, a focused assessment of ESG performance was conducted for a subset of 41 companies during the year 2023. This subset includes the 30 Indonesian companies and 11 Korean financial institutions previously examined for biodiversity disclosure. ESG evaluation was not extended to the remaining foreign financial institutions, as the primary comparative objective of the study was to assess ESG implementation by Korean firms relative to leading Indonesian companies operating under the same regulatory conditions in Indonesia.

The decision to restrict ESG analysis to a single year is based on both methodological and practical considerations. Multi-year panel analysis of ESG performance is highly complex due to the evolving nature of reporting standards, variation in metrics, and inconsistency in third-party assurance practices across time. In contrast, a single-year cross-sectional assessment offers temporal consistency and captures the most recent corporate ESG strategies and disclosure frameworks under the current reporting environment. The year 2023 was selected as it represents a period of maturity in ESG reporting, marked by the increasing adoption of internationally recognized standards and third-party assurance mechanisms.

The ESG performance of the 41 selected companies was assessed using a structured framework composed of five dimensions: presence of a formal ESG framework, benchmarking of ESG performance metrics, articulation of ESG roadmaps with clear targets, inclusion of third-party ESG assurance, and a weighted composite score aggregating all four dimensions. This framework was designed to evaluate both structural and outcome-based components of ESG disclosure and to enable systematic comparison between domestic and foreign companies operating within Indonesia.

This two-stage analytical design allows for an in-depth understanding of how companies disclose and implement sustainability practices, beginning with biodiversity as a specific environmental domain and extending to broader ESG integration. It also facilitates a focused comparison between Indonesian and Korean firms under consistent institutional conditions.

The first component discusses the existence of an ESG framework, or similar terms such as the materiality matrix, as a reference for companies in developing and implementing sustainability strategies. Materials analysis often uses the Global Reporting Initiative (GRI) materiality matrix as a guide. Other ESG reporting standards such as SASB and TCF as well as rating methodologies (Sustainalytics, MSCI) focus on industry information to highlight related issues for stakeholders. This component shows how companies develop and manage their sustainability strategies.

To measure this component, we compiled recommended material topics from various ESG reporting standards and rating methodologies by harmonizing ESG-related terms for specific industries. This compilation is cross-referenced with the ESG frameworks adopted by companies, and we assess the alignment of each company's ESG framework with the recommended material topics. Details of this evaluation are provided in the following Table 2:

The second component focuses on quantitative metrics developed by various ESG standards and rating agencies. Just like financial performance is measured with clear metrics, ESG performance requires comparisons with measurable indicators. Supported by research by Risso and Longarini (2023) which emphasizes the importance of standard benchmarks as a benchmark for ESG performance in various industry sectors and proposes the use of performance indicators to assess corporate governance through factor analysis.

To measure this component, we classify indicators for each ESG topic as quantitative or qualitative, prioritizing ratio-based metrics (e.g., emission intensity) over absolute figures. These metrics are then compared with data from the previous 3 years and with national industry peers that have similar ESG ratings or risk profiles. Detailed results of our ESG performance metrics are presented in the following Table 3.

The third element emphasizes management's commitment to effectively addressing ESG issues, which is crucial for aligning company objectives in both the short and long term (Agbakwuru et al., 2024). This commitment also aligns with stakeholder interests.

To assess this component, we will examine each material ESG topic for every company to determine if there is a clear SMART target (Specific, Measurable, Achievable, Realistic and Time bound) associated with it. The focus will be on the presence of these targets rather than their magnitude, as companies may have different resources.

The fourth element emphasizes the validation of ESG achievements by an independent third party. Just as financial statements are audited to ensure their accuracy and reliability, achieving credible ESG requires independent validation. The study conducted highlights the importance of a reliable ESG research system to overcome data quality and data validation constraints (Liu et al., 2023). Independent validation helps prevent companies from controlling the issue of greenwashing, i.e., claims that exaggerate or misrepresent the company's environmental credentials (De Silva Lokuwaduge and de Silva, 2022). This component assessment is carried out by reviewing the sustainability report (or similar document) for the ESG assurance statement to ascertain whether or not the ESG disclosures provided have been independently verified by a third party.

An ESG assessment consists of several key components that are measured separately to produce a final score that reflects the company's overall ESG performance. There are main component emotes that are evaluated, including ESG framework and/or ESG materiality matrix, Sustainability performance metrics benchmarking, Presence and coverage of ESG roadmaps, Existence of ESG assurance. Each of the four components has a different weight that reflects the importance of the role of these components for sustainability and governance.

The final score of the ESG framework is 10% which includes the structure of the company's policies in managing the company's ESG issues as the basis for effective ESG management. Its low weight reflects the general condition among companies in Indonesia. In contrast, ESG performance carries a higher weight of 30%, measuring measurable achievements related to ESG indicators and trends in addressing sustainability issues over time. The ESG roadmap also receives a weight of 30%, assessing how clearly the company outlines its roadmap and concrete targets for future ESG issues. The fourth component, ESG assurance with a weight of 30%, where this component ensures the credibility of the company's ESG reports and achievements through independent recognition. This weighting is determined through ongoing discussions with experts to prioritize important elements in effective ESG management.

The weighting scheme reflects the relative maturity and influence of each ESG component toward driving meaningful sustainability outcomes. The ESG Framework was assigned the lowest proportion because disclosure frameworks and materiality mapping have been well-established for years through international standards such as the GRI Materiality principle, widely adopted in Indonesia and evidenced through the increasing use of materiality matrices in listed companies' sustainability reports (Calabrese et al., 2019). Frameworks primarily guide the structure and scope of disclosure, rather than directly indicating performance impact, therefore a lower weight is appropriate. In contrast, the remaining three dimensions (Performance, Transition Roadmap, and Assurance) were weighted equally due to their critical and emerging role in shaping credible, outcome-oriented ESG reporting. Performance metrics and outcomes align with the ISSB/IFRS S1–S2 requirement for decision-useful sustainability metrics and targets, emphasizing measurable results (Nielsen, 2023). Transition plans and science-aligned targets are increasingly mandated by regulations such as the EU CSRD and reinforced through global commitments, highlighting their role in ensuring forward-looking accountability. Independent external assurance is gaining prominence through standards such as ISSA 5000 and ISAE 3000 (Revised), enhancing data credibility and stakeholder trust (Simnett et al., 2009). Because these three pillars collectively drive material, verifiable, and future-oriented impact, assigning them equal and higher weight is conceptually justified. The ESG score is calculated using the following formula: Bottom of Form

Information:

Among the top 30 Indonesian companies identified by sustainalytics in 2023 with the lowest ESG risk, our analysis shows a substantial increase in sustainability reporting between 2019 and 2023. In 2019, only 17 companies (56.7%) published sustainability reports, rising to 29 companies (96.7%) by 2023 (Figure 2). This shift aligns with Indonesia's regulatory evolution under the Financial Services Authority (OJK), which introduced mandatory sustainability reporting through Regulation No. 51/2017 and further detailed content and format requirements via OJK Circular Letter No. 16/SEOJK.04/2021(SSEK, 2024).

However, while general ESG reporting gained traction, biodiversity-specific metrics remained underdeveloped. References to “biodiversity” increased from 12 companies in 2019 to 26 in 2023. Despite this increase, only a marginal number included biodiversity as a material topic, one in 2019, peaking at four in 2022, then declining to two in 2023. Similarly, GRI 304 alignment grew from two companies in 2019 to eight in 2023. These results, partially confirm H1 and H3, indicating that while disclosure frequency improved, the limited materiality and weak GRI 304 alignments show biodiversity remains only superficially integrated within ESG frameworks. These findings suggest that while regulatory pressure, such as OJK's mandatory reporting requirements, succeeded in broadening disclosure practices, it did not compel companies to meaningfully incorporate biodiversity into their strategic risk frameworks. This pattern is consistent with recent evidence that mandatory sustainability rules expand disclosure volume without guaranteeing depth or decision-useful quality, particularly for nature-related topics (Latella and Veltri, 2024).

Several factors contribute to this limited integration. OJK Regulation 51/2017 mandates the preparation of sustainability reports by public and financial institutions but does not explicitly require biodiversity metrics; the 2021 Circular Letter focuses on report structure and minimum contents rather than prescribing GRI 304 metrics (OJK Regulation 51., 2017). During our study window (2019–2023) the relevant global standards were still evolving; GRI's update to biodiversity reporting (GRI 101: Biodiversity 2024) will only replace GRI 304 from 2026 onward, meaning firms were not yet required to adopt the revised biodiversity content. Similarly, the Circular Letter 16/2021 provides technical guidance on reporting form and content without imposing biodiversity-specific provisions (Meutia, 2023). Indonesia's 2020–2030 National Biodiversity Strategy and Action Plan (NBSAP) set voluntary disclosure targets but lacked enforcement mechanisms. Meanwhile, global frameworks such as the Kunming–Montreal Global Biodiversity Framework (adopted COP15, 2022), Taskforce on Nature-related Financial Disclosures (TNFD, finalized 2023), and revised GRI 304 standard (2024) provided external pressure to increase biodiversity visibility. However, firms, particularly those under domestic regulatory regimes, appear to have responded primarily by increasing narrative references rather than substantive strategic integration. Furthermore, recent peer-reviewed studies on biodiversity disclosure corroborate our interpretation: cross-country analyses find that biodiversity reporting is uneven, shaped by emerging global frameworks (GRI/TNFD/ESRS), and often lags climate disclosure in both coverage and quality—exactly the pattern we observe in Indonesian leaders (Bassen et al., 2025; Lammerant, 2024).

The second sample included 40 high-revenue financial institutions operating in Indonesia, divided into Group A (Korean, 11 firms), Group B (Indonesian, 13), and Group C (Foreign non-Korean, 16). All groups exhibited increased sustainability reporting activity, with Group C outperforming the others in frequency and depth of disclosures, followed by Group B and then Group A. According to Figure 3, there was no clear trend in the use of the keyword “biodiversity” across the groups during the selected period. However, Group B mentioned it more frequently than Groups A and C, indicating greater emphasis on biodiversity.

Foreign financial institutions in Group C demonstrated the most robust engagement with biodiversity issues. Nearly every firm that mentioned biodiversity classified it as a material topic and showed progressive alignment with GRI 304 requirements from 2020 to 2023. This cross-group variation supports H1, as institutional environments and regulatory maturity clearly influence disclosure depth, and further reinforces H3 by confirming that biodiversity continues to hold a peripheral position across corporate sustainability reporting. This likely stems from their exposure to international regulatory regimes, including the EU CSRD (effective 2023), as well as early adoption of TNFD principles. The TNFD, finalized in September 2023, has gained over 500 organizational commitments including 129 financial firms with USD 17.7 trillion in assets to implement nature-related disclosures (Asuene Inc., 2025). Similar patterns have been documented in Europe and Japan, where banks subject to CSRD and TNFD frameworks show earlier integration of biodiversity risk management compared with those in emerging markets

Indonesian financial institutions (Group B) showed moderate progress. A gradually increasing number mentioned biodiversity, though fewer than half designated it as material. Some have begun referencing Bank Indonesia's 2022 Green Taxonomy, yet GRI 304 alignment remained inconsistent. This aligns with Uyar et al. (2022), who found that in emerging economies like Turkey, sustainability reporting grows under regulatory pressure but tends to remain descriptive rather than strategic (Kuzey and Uyar, 2017). Korean financial institutions operating in Indonesia (Group A) demonstrated the lowest levels of biodiversity disclosure between 2019 and 2023. None identified biodiversity as a material topic or aligned with GRI 304 standards. References to biodiversity, when present, were typically limited to CSR-related activities rather than integrated risk frameworks. This trend reflects the broader ESG focus of their parent institutions in South Korea, where regulatory emphasis during this period prioritized climate change and corporate governance over biodiversity (Financial Services Commission, Republic of Korea, 2024; ICLG, 2025). South Korea's ESG disclosure roadmap, including guidelines from the Financial Services Commission and the Korea Sustainability Standards Board, positioned biodiversity as a voluntary rather than mandatory theme (Kim, 2023a). Comparable findings were reported by Bassen et al. (2025), who observed that biodiversity-related disclosure remains limited in jurisdictions where ESG guidance is voluntary rather than enforceable (Bassen et al., 2025). Furthermore, Indonesian policy instruments such as OJK Regulation No. 51/POJK.03/2017 and the 2022 Green Taxonomy, while encouraging ESG reporting, did not yet impose biodiversity-specific requirements, offering limited regulatory incentive for deeper integration at the branch level (Indonesia Financial Services Authority, 2025). As biodiversity increasingly becomes addressed in international frameworks like COP15's Kunming-Montreal GBF (2022), TNFD (2023), and EU CSRD (2023), future disclosures from these institutions may become more robust. However, between 2019 and 2023, biodiversity remained a secondary consideration due to prevailing regulatory and institutional priorities.

The differential performance among both corporate and financial samples echoes the influence of regulatory environments and market governance. Indonesia's NBSAP and OJK's sustainability regulation strengthened domestic ESG governance but lacked biodiversity specificity, leading firms to boost disclosure volume without strategic substance. This outcome parallels results from Latin American and ASEAN markets, where regulation expanded ESG visibility, but substantive biodiversity management remained limited (Ali et al., 2024). International frameworks such as GBF, TNFD, CSRD, and SBTN, gaining momentum during 2020–2023, have created tangible incentives for foreign firms to deepen biodiversity reporting (Goldberg and Yonge, 2024).

Financially, global institutions with multinational mandates have internalized biodiversity risks in their capital allocation under the TNFD and GRI 304 frameworks. Indonesian banks, responding to national taxonomies and emerging domestic sustainability discourse, have followed suit. Korean banks, however, have remained largely insulated from these pressures, continuing to prioritize climate and corporate governance over biodiversity.

The observed differences reflect how global sustainability standards are interpreted through transnational governance processes. Rather than being adopted wholesale, frameworks such as GRI 304 and TNFD are translated into Indonesia's institutional setting through OJK regulations and the 2022 Green Taxonomy, creating a hybrid ESG model suited to local priorities (Czarniawska and Joerges, 1996). ESG disclosure also functions as a legitimacy mechanism, allowing firms to demonstrate conformity with societal and investor expectations (Suchman, 1995; Deegan, 2002). In emerging markets, disclosure often expands faster than substantive change, reflecting institutional decoupling where reporting secures legitimacy even amid limited implementation (Meyer and Rowan, 1977; Azizul Islam, 2016).

In Figure 4, Indonesian companies achieve a relatively high ESG Framework score of 0.81, indicating effective development and implementation of corporate ESG strategies. This demonstrates their capability in formulating ESG materiality matrices and structured sustainability plans addressing climate change and resource management, potentially enhancing their transparency, reputation, and global competitiveness. Comparable results were reported by Lagasio and Cucari (2019), who found that strong governance mechanisms and board structures enhance ESG framework quality in emerging markets (Lagasio and Cucari, 2019).

In contrast, Korean companies operating in Indonesia score lower (0.68), suggesting challenges in fully implementing their ESG frameworks locally. Although Korean firms typically adhere to global ESG standards, they appear to face adaptation issues in Indonesia, highlighting a need for better alignment and structured approaches to local sustainability management. Korean multinationals often experience difficulty contextualizing ESG frameworks to host-country regulatory expectations (Kim, 2023b).

A statistical t-test (Table 6) confirms this difference (t-value = 2.028, coef. 0.127^**), statistically validating that Indonesian companies currently have more advanced ESG frameworks compared to Korean companies facing adaptation hurdles.

The combined ESG framework score for Indonesian and Korean companies is 0.78, reflecting how these firms collectively design and implement their sustainability strategies. This aggregate figure is calculated by averaging each country's ESG Materiality Matrix Score, thereby offering a regional benchmark that complements our primary cross-country comparisons.

Notably, biodiversity risk management has emerged as a critical environmental dimension within these matrices. Prior research (Ali et al., 2024; Adler et al., 2018) shows that substantive voluntary biodiversity disclosure both signals genuine environmental stewardship and reduces information asymmetry precisely the qualities our “two or more environmental topics” criterion rewards. Consequently, firms that explicitly integrate biodiversity into their materiality matrices not only achieve higher framework scores but also tend to exhibit stronger environmental performance and greater stakeholder trust.

While our main hypothesis examines differences between Indonesian and Korean companies, presenting the combined score provides valuable context about overall sustainability practices in the region. It underscores shared commitments to ESG principles and collective strengths despite variation in industry specific and regional priorities and illustrates how integration of ESG considerations into core business strategies has become a regional norm.

ESG performance must be measured through verifiable indicators and benchmarking to validate sustainability claims and enable comparisons over time and against peers. Based on Figure 4, Indonesian companies record an ESG Performance Score of 0.59, indicating solid ESG management, though still trailing Korean firms, which achieve a score of 0.75.

A two-sample t-test confirms that this performance gap is statistically significant (t = −2.020, coef. = −0.160^*, p < 0.1), suggesting that while Indonesian firms excel in ESG planning, they need to strengthen operational execution and monitoring. In contrast, Korean companies demonstrate robust implementation particularly in carbon emissions control, waste management, renewable energy deployment, employee welfare, and community engagement underpinned by higher transparency and governance accountability (Lee and Ahn, 2025). This pattern aligns with Friede et al. (2015), who aggregated over 2,000 empirical studies and found that firms with mature ESG systems exhibit stronger operational and financial performance (Friede et al., 2015).

Beyond operational factors, recent regulatory initiatives have further shaped ESG outcomes in Indonesia. The Financial Services Authority's Sustainable Finance Roadmap Phase II (POJK 5/2021) mandates that listed firms integrate emissions reductions, resource efficiency, and social impact targets into their strategic planning through 2025. Complementing this, the Indonesia Green Taxonomy Edition 1.0 (2022) offers a standardized classification of eligible “green” activities, guiding firms toward measurable investment targets and enhancing comparability across sectors (Farihah et al., 2024). By translating high level ESG commitments into concrete reporting requirements and incentive structures, these regulations reduce ambiguity around performance metrics and encourage firms to adopt science-based targets, external assurance, and sector-specific benchmarks thereby accelerating the transition from policy compliance to demonstrable sustainability outcomes.

Indonesian companies achieve an average ESG Roadmap Score of 0.83, indicating that most firms clearly articulate both short- and long-term sustainability targets across material ESG topics. In contrast, Korean companies operating in Indonesia record a much lower score of 0.32, suggesting that fewer than half of their material issues are paired with explicit targets. This disparity highlights significant differences in strategic commitment to ESG planning between the two groups.

A statistical t-test (Table 6; t-value = 5.722, coef. = 0.532) confirms a significant difference between Indonesian and Korean companies' ESG roadmap scores. These findings underline a clear gap in the effectiveness of both groups in defining and pursuing sustainability strategies. Indonesian companies are thus validated as more advanced in developing ESG roadmaps, while Korean companies experience adaptation challenges. The combined ESG Roadmap Score for both Indonesian and Korean companies is 0.70, calculated as the average ESG roadmap scores from companies in each country. Management commitment to robust ESG roadmaps is critical for translating high-level sustainability ambitions into actionable plans. By setting SMART targets Specific, Measurable, Achievable, Relevant, and Time-bound for each material issue, companies ensure accountability and enable stakeholders to track progress against clear milestones. Well-defined roadmaps also align corporate strategies with global frameworks, such as the Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs), while signaling to investors and regulators that the firm is prepared to manage environmental, social, and governance risks over both the short and long term.

Figure 4 presents the ESG Assurance Score, measuring the extent to which companies obtain independent third-party validation of their sustainability reports a critical element for enhancing the credibility of ESG disclosures, akin to financial auditing. Indonesian companies achieve an average ESG Assurance Score of 0.63, indicating a relatively strong commitment to verifying ESG performance through external assurance. This reflects an increasing recognition of the value of third-party validation in enhancing transparency, bolstering stakeholder trust, and ensuring compliance with sustainability standards. In contrast, Korean companies operating in Indonesia show a lower ESG Assurance Score of 0.44, suggesting that while some third-party validation is present, it is often limited in scope or application. This moderate level of assurance may not be sufficient to meet rising expectations from global investors and regulators who demand more rigorous and comprehensive sustainability validation. The combined ESG Assurance Score for Indonesian and Korean companies is 0.58, representing a reasonable commitment to third-party ESG validation. A statistical t-test (Table 6; t-value = 3.182, coef. = 0.190^*) confirms a significant difference in ESG assurance between Indonesian and Korean firms. This result is not coincidental but reflects genuine disparities in their sustainability evaluation approaches. Indonesian companies demonstrate leadership with more comprehensive ESG validation across environmental, social, and governance dimensions. Conversely, Korean companies must enhance their ESG assessment processes, developing robust systems to clearly identify ESG strengths and areas needing improvement. This analysis underscores Indonesian firms' effectiveness in implementing thorough ESG assessments aligned with their long-term sustainability objectives.

External assurance is increasingly recognized in academic and regulatory discussions as a key mechanism to improve the credibility, reliability, and comparability of sustainability disclosures. While still voluntary in many jurisdictions, companies that opt for independent assurance signal stronger ESG governance and transparency. Prior studies (Simnett et al., 2009; Dando and Swift, 2003; Cheng et al., 2015) emphasize that assurance reduces reporting bias, deters opportunistic misreporting, and enhances stakeholder confidence. In the context of ESG reporting, assurance not only reduces the likelihood of greenwashing (Fuhrmann et al., 2017), but also addresses the growing disagreement between ESG ratings by enhancing the consistency and auditability of reported data (Gipper et al., 2024; Kimbrough et al., 2024). However, the extent and quality of assurance vary widely many firms still opt for limited rather than reasonable assurance, and often verify only selective aspects such as GHG emissions rather than the full ESG scope (Ballou et al., 2018; Michelon et al., 2015). Simnett et al. (2009) show that the uptake of sustainability report assurance varies widely across countries and is shaped by institutional and legal factors; this helps explain the uneven adoption we observe (Simnett et al., 2009).

The ESG assessment measures several key components evaluated separately and combined to produce a final score reflecting a company's overall ESG performance. The four components are the ESG framework, ESG performance, ESG roadmap, and third-party ESG validation, each assigned different weights based on their importance to sustainable practices and corporate governance. This assessment evaluates how well companies formulate ESG policies, report measurable achievements, set future sustainability targets, and verify claims through independent validation. The calculation formula is as follows:

The ESG score of 0.393 for Indonesian companies indicates a strong commitment to sustainability, especially in future planning through a defined ESG strategy. However, improvements are needed in practical ESG performance and third-party validation to enhance the credibility of their sustainability achievements.

The ESG score is calculated by combining the weighted values of each component using the following formula:

With a total score of 0.272, Korean companies operating in Indonesia have a solid ESG framework and demonstrate good performance in some sustainability components. However, low scores in the ESG roadmap and third-party validation highlight the need for improvement in long-term sustainability planning and enhancing the credibility of their ESG claims through independent validation.

This assessment measures how effectively a company formulates and implements sustainability strategies while ensuring the credibility of its ESG claims. The ESG score serves as a benchmark for assessing a company's overall commitment to sustainability practices and is calculated by combining the weighted values of each component using the following formula:

With an ESG score of 0.361, the combined Indonesian and Korean companies demonstrate a commitment to managing ESG issues, particularly in sustainability policies and roadmaps. However, improvements are needed in measurable performance and third-party validation to enhance credibility.

Overall, Indonesian companies scored higher in ESG framework development (0.81 vs. 0.68), while Korean firms performed better in operational metrics (0.75 vs. 0.59), resulting in a moderate combined score of 0.63 that indicates progress but continued scope for improvement. Meanwhile, the ESG roadmap scores reflect a strong commitment from Indonesian companies (0.84) to long-term sustainability planning, while Korean companies score lower at 0.32, suggesting a need for better strategic planning. Third-party ESG validation also requires development, with a combined score of 0.58, indicating moderate transparency but a need for more comprehensive assurance processes. Overall, while there is a solid foundation, particularly in Indonesia, there is potential for improvement in measurable performance and external validation to meet global sustainability standards. The ESG results support both H1 and H2. The clear differences between Indonesian and Korean companies show that each country's rules and systems strongly affect ESG performance (H1). Indonesian firms achieved higher scores in frameworks, roadmaps, and assurance because of national reporting regulations, while Korean firms performed better in actual operations due to their stronger home-country ESG systems (H2). Overall, the findings show that government rules help shape ESG structure, but company experience and maturity determine how well those plans are carried out.