INTRODUCTION

BACKGROUND : In Background, I state about the main goal of business, The initial goal of starting a
business is to maximize profits and be accountable to stakeholders and interest groups. However, this
view is shifting to an increasingly broad perspective. A company that is purely profit-oriented and
neglects environmental and social considerations cannot guarantee future business continuity. Today,
businesses are challenged not only to remain profitable, but also to do business sustainably by evolving
to meet the needs of today's world without denying future generations the ability to do so.

SUSTAINABILITY REPORT : One of the media to disclose information about Corporate Social
Responsibility activities to stakeholders is the sustainability report. Sustainability reporting is a term
commonly used to describe the various practices that organizations use to provide information on
sustainability issues(Laine et al., 2021). Sustainability reporting reports to stakeholders on the
organization's strategies, priorities, policies, and practices related to sustainability issues, the
organization's sustainability performance, and the sustainability impacts of its operations. Sustainability
reports also describe how an organization depends on the environment, society and economy, the risks
and opportunities associated with such dependence, and the responsibilities and accountability
associated with organizational sustainability

REGULATION : Reporting on sustainability reporting is mandatory only for the financial and investment
industries outside the financial sector, and sustainability reporting is voluntary disclosure. Financial
Services Agency Regulation No.51 / POJK.03/2017 this regulation requires banks and financial
companies, as well as companies listed on the Indonesia Stock Exchange, to implement sustainable
finance and report it in its Sustainability Report. Then, Sustainability reports are voluntary disclosures of
the non-financial sector, where disclosure of information is not required by applicable regulations, but is
disclosed by the company as it is deemed relevant to the needs of user

CLIMATE CHANGE ISSUE : With the rising issue of global warming and climate change, there is a growing
debate about the evolution of sustainability reporting. Companies around the world need to care more
about the environment than just the pursuit of profit. The number of violations committed by
companies raises public awareness to proactively monitor the environment around their existing
operations and their impact on the sustainability of their operations

PHENOMENA

Water Quality Index (IKA) = According to Quality Environment Index Report (IKLH) in 2019, There are
still 9 provinces that are in a moderately good predicate, namely 8 provinces with a poor predicate and 1
province with a very poor predicate.

Land Quality Index (IKTL) = According to Quality Environment Index Report (IKLH) in 2019, There are still
6 provinces that are on alert, namely South Sumatra, Banten, West Java, Lampung, DI Yogyakarta, and
DKI Jakarta. In addition, there are also 4 provinces that have very poor ITKL predicates, namely Riau,
South Kalimantan, Bali and Bangka Belitung.
Pollution = Pollution is one of the contributors to death, where 4.1 percent of global deaths are
contributed by indoor pollution. In Indonesia alone, 40.95 percent of deaths out of 100 thousand people
are due to pollution

Problem :

1. So based on 2 journal I take about political visibility, on first journal in 2016 said Political
visibility has a positive effect on SRD, but in 2017 in other research said, it has negative effect on
SRD. So, there is a gap on the variable. It makes me want to test it in company in Indonesia
2. Based on 2 journal, my main reference said external assurance has positive and significant effect
on SRD, but on other journal it has negative effect on SRD. The publish year of journal is same.
3. My main reference for Board of Director Variable said that BoD has negative impact to SRD.
That’s why I want to research again about this variable and test it on the current situation

Theory :

1. The theory of legitimacy (Legitimacy theory) focuses on the interaction between companies and
society. Legitimacy theory states that organizations continually strive to ensure that they carry
out activities in accordance with societal boundaries and norms
(Kalau ditanya maam kenapa legitimacy theory) Several studies on disclosure of the social
environment have used legitimacy theory as a basis for explaining its practice (Ghozali and
Chariri, 2007 in Widianto, 2011:29) explaining that legitimacy theory is very useful in analyzing
organizational behavior. they say :
"Legitimacy is important for organizations, boundaries are imposed by social norms and values,
reactions to these boundaries encourage the importance of analyzing organizational behavior
with respect to the environment."
2. Sustainability report : Based on the Global Initiative Reporting (2016) "Sustainability reporting is
the practice of an organization that publicly reports its economic, environmental and/or social
impacts, and therefore also on the contribution of the organization positively or negatively to
sustainability goals". Through this process, organizations identify significant economic,
environmental and/or social impacts and issue them based on globally accepted standards.
Currently the implementation of sustainability reports in Indonesia is supported by government
regulations such as the Limited Liability Company Law (PT) No. 40 of 2007. Reporting of social
and environmental responsibility activities disclosed through a sustainability report requires
guidelines
3. GRI : The Global Reporting Initiative (GRI) is an independent international organization that
develops sustainability reporting standards (Sustainability Report). The reporting standards in
this sustainability report will assist businesses and organizations in communicating the impact
caused by the company's business processes.
4. Political Visibility : costs incurred in disclosing political aspects are termed political visibility.
These costs are the company's external costs arising from views of anxiety, political pressure
from society, the environment, and the government from the company's operational activities
5. External Assurance : External assurance can play a significant role that has already been proven
to affect the perception of increased credibility and reliability. Hodge et al. (2009) concluded
that to make information on social and environmental issues more dependable, a statement of
 assurance should be involved. Still, it can be more effective when the assurance comes from
reliable accounting firms, which are considered to be more accurate
6. Board of Director : the board of directors has the function and authority to control the
implementation of the company's wheels every day, according to strategic policies as a
guarantor for the realization of the principles of accountability and fairness contained in GCG.
This relates to accountability and fairness in sustainability reporting disclosure