Corporate Governance And ESG Reporting Quality in the Banking Sector: Evidence From Indonesia and The United Kingdom

Abstract

This study investigates the determinants of ESG reporting quality in the banking sector, examining governance mechanisms and the moderating role of institutional context across Indonesia and the United Kingdom. Using panel data from 31 banks (118 firm-year observations, 2020-2024), Fixed-Effects regression was employed to test main effects, while Pooled OLS with interaction terms was used to examine moderation. Research evaluates whether board meeting frequency, audit committee independence score, and audit expertise score influence ESG disclosure, and whether the UK context moderates these relationships. The findings show that higher audit committee quality is associated with better ESG reporting (β = 0.12, p < 0.05), highlighting the value of strong oversight. Audit expertise has a slightly positive effect (β = 0.09, p < 0.10). More frequent board meetings, however, have a significant negative effect (β = -0.11, p < 0.10), which runs counter to the expected positive link and does not support H1. The moderation analysis shows that meeting frequency has opposite effects in the two countries: it is positive in Indonesia but negative in the UK (interaction β = -0.53, p<0.05). Audit committee quality has a stronger positive effect in the UK (interaction β = 0.50, p<10), while audit expertise has similar effects in both countries. Company size and emissions also play a role in ESG reporting quality. These results add to agency theory by showing that oversight quality matters more than the number of meetings, and to institutional theory by showing that governance varies by context. The study suggests that Indonesian banks should focus on improving committee quality and expertise, while the UK banks should prioritize effective meetings over more frequent ones. Improving governance structures is important to prevent greenwashing and ensure reliable sustainability reporting.