TRANSPARENCY, ACCOUNTABILITY, AND GREENWASHING IN INDONESIA'S EXTRACTIVE INDUSTRY

Abstract

This study analyzes the complex relationship between corporate transparency, Environmental, Social, and Governance (ESG) performance, and greenwashing practices within the context of Indonesia's extractive industry. Employing a quantitative approach using Partial Least Squares Structural Equation Modeling (PLS-SEM), the research tests a path model that positions the three pillars of ESG performance Environmental (Z1), Social (Z2), and Governance (Z3) as mediating variables between transparency (X1) and greenwashing (Y). Primary data were collected from extractive companies located in East and West Java. The analysis reveals that transparency has a significant and negative influence on greenwashing, both directly and indirectly through the mediation of ESG performance. Authentic and substantive ESG performance is proven to be the most effective deterrent against disinformation practices. Specifically, social performance (Z2) demonstrates the largest effect size (F² of 0.464) in mitigating greenwashing, indicating that social issues, which are more readily verifiable by the public, play a crucial role. This model exhibits a very strong explanatory power (R² of 0.632) in predicting the variation of greenwashing, although its predictive capability for ESG performance is relatively limited. These findings offer a theoretical contribution by explaining the dual mechanism through which transparency operates and provide clear strategic guidance for stakeholders seeking to foster genuine accountability in the extractive industry.