Analysing sustainability report using GRI index for fundamental labour rights and corporate governance

Abstract

Based on their sustainability reports (SR), this study investigates Indonesian stated-owned companies’ compliance with fundamental labour rights and corporate governance (CG). Empirical and content analysis was carried out based on the Global Reporting Initiative (GRI) standard index published by 41 state-owned companies from 12 clusters in Indonesia. The study also compared the disclosure performance of several industrial-sector clusters by measuring each cluster’s total compliance rate. This study also analyses whether the high corporate governance disclosure will lead to a high level of fundamental labour rights reports. Using content analysis and multivariate analysis of WarpPLS, this study finds that companies tend to disclose clearly basic requirements on fundamental labour rights, such as information about new hires and employee turnover and essential information on corporate governance structure and composition (Martin et al., 2016; Sikka, 2008). In contrast, companies tend to hide information about reasonable notice of significant operational changes and critical concerns in companies. Based on the industrial sectors, the company in the energy, oil, and gas cluster have the highest level of compliance concerning corporate governance and labour disclosure. Then, this study also discovers that companies with high compliance levels on corporate governance disclosure tend to inform more in labour rights activities.