Legitimacy in Mining Companies: The Effect of Asset Newness and Capital Expenditure on ESG Disclosure
Abstract
Amid global sustainability pressures, mining companies are facing intense public scrutiny. Using an integrated framework of Legitimacy, Signaling, and Stakeholder theories, this study examines the influence of physical asset characteristics, specifically asset newness and capital expenditure (CAPEX), on Environmental, Social, and Governance (ESG) disclosure. Using a quantitative design, this study analyzes a purposive sample of 57 observations from mining companies for the period 2020-2024. Data are processed using fixed-effect panel data regression with robust standard errors. ESG disclosure is measured through content analysis based on the OJK index no. 51/POJK/03./2017. The results show that asset newness has a significant negative effect on ESG disclosure, confirming the phenomenon of "reverse legitimacy". This indicates that companies with obsolete assets use extensive disclosure as a defense mechanism to bridge the legitimacy gap and appease stakeholders. In contrast, CAPEX does not show a significant effect, implying that capital allocation in emerging markets is still focused on operational capacity and not yet oriented towards green technologies. This study concludes that ESG reporting often serves as a symbolic legitimacy tool rather than a proactive commitment. These findings encourage policymakers and investors to critically evaluate the true nature of corporate asset expansion. This study contributes to the literature by integrating physical asset metrics with the still very limited ESG disclosure and demonstrating the existence of the “reverse legitimacy” phenomenon and CAPEX divergence in the context of emerging economies.
Downloads
References
Adam, M. (2024). The Influence of Environmental Social and Governance ( ESG ) on the Financial Performance of Banking Companies Listed on the Indonesian Stock Exchange ( BEI ). 7(April), 112–118.
Al-Tarawneh, A., Tayeh, M., Iskandrani, M., & Obeidat, M. (2024). The impact of ESG scores on corporate financial performance: A study of non-financial firms listed in the UK. Asian Economic and Financial Review, 14(11), 852–867. https://doi.org/10.55493/5002.v14i11.5229
Arvidsson, S., & Dumay, J. (2021). Corporate ESG reporting quantity, quality and performance: Where to now for environmental policy and practice? Business Strategy and the Environment. https://doi.org/10.1002/bse.2937
Asiri, M. (2025). The impact of capital expenditure on ESG performance : the moderating role of CEO board membership in Saudi listed firms. https://doi.org/10.1108/IMEFM-11-2024-0579
Chen, S. L., Wang, D. ni, & Chen, H. W. (2025). The impact of ESG factors on credit ratings: An empirical study of European banks. International Review of Economics and Finance, 99(October 2024), 104056. https://doi.org/10.1016/j.iref.2025.104056
Deka, A. (2025). Juxtaposing the role of effective capital, energy efficiency and technological innovations on environmental sustainability in the EU countries. Management of Environmental Quality: An International Journal. https://doi.org/10.1108/meq-08-2024-0351
Destri, A. M. L., Minà, A., & Picone, P. (2022). Corporate social irresponsibility and stakeholders’ support: evidence from a case study. Journal of Management and Governance, 28, 37–62. https://doi.org/10.1007/s10997-022-09639-4
Dowling, J., & Pfeffer, J. (1975). Organizational Legitimacy: Social Values and Organizational Behavior. The Pacific Sociological Review, 18(1), 122–136. https://doi.org/10.2307/1388226
Dutta, P. (2019). Determinants of voluntary sustainability assurance : the importance of corporate environmental performance. 16(8), 1403–1414. https://doi.org/10.1108/SRJ-06-2019-0213
Dutta, P., & Dutta, A. (2020). Impact of external assurance on corporate climate change disclosures : new evidence from Finland. February. https://doi.org/10.1108/JAAR-08-2020-0162
Hakim, L., Wahyutomo, D., & Oktayani, D. (2025). Relationship between Financial Performance ESG Score: An Empirical Analysis of Listed Companies on Indonesia Stock Exchange. Journal of Business Management and Economic Development. https://doi.org/10.59653/jbmed.v3i01.1217
Herbohn, K., Walker, J., & Loo, H. Y. M. (2014). Corporate Social Responsibility: The Link between Sustainability Disclosure and Sustainability Performance. Accounting. https://doi.org/10.1111/abac.12036
Iazzi, A., Papa, A., Palladino, R., & Lamusta, S. (2025). Evaluating Companies’ Impression Management Tactics in Mandatory Sustainability Reporting. Business Strategy and the Environment. https://doi.org/10.1002/bse.4326
Itan, I., Hilrian, R. D., & Ramadana, M. (2025). The Role Of Board Composition On ESG Disclosure : An Analytical Study In Indonesia. 9, 3312–3334.
Joseph, R. (2025). Environmental issues in Mining: A Comprehensive Review of Challenges and Strategies for Mitigation and Rehabilitation. Mining Revue, 31, 51–71. https://doi.org/10.2478/minrv-2025-0029
Juma, S., Ayeng’o, S., & Kimambo, C. (2025). Evaluating the Role of Energy Management Systems in Enhancing Operational Efficiency and Sustainability of Mini‐Grids in Malawi. IET Smart Grid. https://doi.org/10.1049/stg2.70023
Karima, T., Hidayat, K., Nuzula, N. F., & Damayanti, C. R. (2025). The Effect of Risk on Capital Structure, Profitability, and Firm Value with Sustainability Report as a Moderating Variable. OIDA International Journal of Sustainable Development, 18(12), 475–488. https://www.scopus.com/inward/record.uri?eid=2-s2.0-105025099678&partnerID=40&md5=104a30515838f782d171d85fa1923554
Karwowski, M., & Raulinajtys-Grzybek, M. (2021). The application of corporate social responsibility ( CSR ) actions for mitigation of environmental, social, corporate governance ( ESG ) and reputational risk in integrated reports. Corporate Social Responsibility and Environmental Management. https://doi.org/10.1002/csr.2137
Khamisu, M. S., Paluri, R., & Sonwaney, V. (2024). Environmental social and governance (ESG) disclosure motives for environmentally sensitive industry: an emerging economy perspective. Cogent Business & Management, 11. https://doi.org/10.1080/23311975.2024.2322027
Klius, Y., Vasyurenko, L., Manukhina, M., Sieriebriak, K., Ivchenko, Y., & Kharkovyna, O. (2025). MANAGING THE FACTOR OF INJECTING FIXED CAPITAL INTO FORMING RESOURCE POTENTIAL. Financial and Credit Activity Problems of Theory and Practice. https://doi.org/10.55643/fcaptp.3.62.2025.4739
Liao, M.-H., Wu, Y.-A., Neumann, F., & Chan, Y.-L. (2025). Relationship Between ESG Rating and Firm Performance in Taiwan. In Lecture Notes on Data Engineering and Communications Technologies (Vol. 259, pp. 348–356). Springer Science and Business Media Deutschland GmbH. https://doi.org/10.1007/978-3-031-96093-2_34
Lokuwaduge, C., & Heenetigala, K. (2017). Integrating Environmental, Social and Governance (ESG) Disclosure for a Sustainable Development: An Australian Study. Business Strategy and The Environment, 26, 438–450. https://doi.org/10.1002/bse.1927
Moon, P. R., Mankar, A. K., & Koner, R. (2026). Green Technologies in Mining: Practices and Adoption Challenges. In Springer Proceedings in Earth and Environmental Sciences: Vol. Part F1106 (pp. 687–694). Springer Nature. https://doi.org/10.1007/978-3-032-09929-7_49
Moussa, A. S., & Elmarzouky, M. (2023). Does Capital Expenditure Matter for ESG Disclosure ? A UK Perspective.
Nathan, V. K., Arunachalam, K., Sharma, N., Ramasamy, S., Sivasubramanian, M., Gautam, S., Rajeshkumar, S., & Mariselvam, R. (2024). Emerging and Advanced Green Energy Technologies for Mining Pollution Reduction. In Sustainable Management of Mining Waste and Tailings: a Circular Economy Approach (pp. 30–57). CRC Press. https://doi.org/10.1201/9781003442455-2
Normalita, I. S., Mahmud, A., Akuntansi, J., Ekonomi, F., & Semarang, U. N. (2017). Analysis of Capital Expenditure and Its Implications on Local Financial Independence Ina. 6(2), 219–228.
Pollach, I., & Schaper, S. (2022). Social visibility and substance in corporate social sustainability disclosures. Corporate Communications: An International Journal. https://doi.org/10.1108/ccij-02-2022-0013
Prasetyo, M. H., Baderan, D. W., & Hamidu, M. S. (2025). Dampak Kerusakan Lingkungan Akibat Eksploitasi Sumber Daya Mineral dari Kegiatan Pertambangan. Hidroponik : Jurnal Ilmu Pertanian Dan Teknologi Dalam Ilmu Tanaman. https://doi.org/10.62951/hidroponik.v2i2.328
Qarahasanlou, A., Khanzadeh, D., Shahabi, R., & Basiri, M. (2022). INTRODUCING SUSTAINABLE DEVELOPMENT AND REVIEWING ENVIRONMENTAL SUSTAINABILITY IN THE MINING INDUSTRY. Rudarsko-Geološko-Naftni Zbornik. https://doi.org/10.17794/rgn.2022.4.8
Rahman, R. A., & Alsayegh, M. (2021). Determinants of Corporate Environment, Social and Governance (ESG) Reporting among Asian Firms. 14, 167. https://doi.org/10.3390/jrfm14040167
Saini, N., Singhania, M., Roy, P., Aggarwal, S., & Kharb, R. (2025). Environment, Social, and Governance Disclosures and Firm Performance: a Critical Review and Future Agenda. Journal of the Knowledge Economy. https://doi.org/10.1007/s13132-025-02769-8
Syahputri, A., Asyitiyani, M. K., & Nurmayanti, R. (2025). ESG Reporting And Market Capitalization In Asia : The ESG Reporting And Market Capitalization In Asia : The Role Of National Cultural Values. 22(2). https://doi.org/10.7454/jaki.v22i2.2028
Tim BEI. (2025). Buku Panduan Pengungkapan Metrik ESG IDX. https://sustainability.idx.co.id/regulation-and-guidance/idx-esg-metrics-disclosure-guidance-book
Tsang, A., Frost, T., & Cao, H. (2022). Environmental, Social, and Governance (ESG) Disclosure: A Literature Review. The British Accounting Review. https://doi.org/10.1016/j.bar.2022.101149
Velte, P. (2021). Meta-analyses on Corporate Social Responsibility (CSR): a literature review. Management Review Quarterly, 72, 627–675. https://doi.org/10.1007/s11301-021-00211-2
Wahyono, Y., Sasongko, N., Trench, A., Anda, M., Hadiyanto, H., Aisyah, N., Anisah, A., Ariyanto, N., Kumalasari, I., Putri, V. Z. E., Lestari, M. C., Panggabean, L. P., Ridlo, R., Sundari, S., Suryaningtyas, A., Novianti, E. D., Hakim, M. R. F., Prihatin, A., & Matin, H. (2024). Evaluating the Impacts of Environmental and Human Health of the Critical Minerals Mining and Processing Industries in Indonesia Using Life Cycle Assessment (LCA). Case Studies in Chemical and Environmental Engineering. https://doi.org/10.1016/j.cscee.2024.100944
Wang, M.-C. (2017). The Relationship between Firm Characteristics and the Disclosure of Sustainability Reporting. Sustainability, 9, 624. https://doi.org/10.3390/su9040624
Yadav, S., Samadhiya, A., Kumar, A., Luthra, S., & Pandey, K. (2024). Environmental, Social, and Governance (ESG) Reporting and Missing (M) Scores in the Industry 5.0 Era: Broadening Firms’ and Investors’ Decisions to Achieve Sustainable Development Goals. Sustainable Development. https://doi.org/10.1002/sd.3306
Zhao, D., Ngan, S. L., Jamil, A. H., Salleh, M. F. M., & Yusoff, W. S. (2025). Peer Effects on ESG Disclosure: Drivers and Implications for Sustainable Corporate Governance. Sustainability. https://doi.org/10.3390/su17104392
Zheng, X., Lu, Y., Cuimei, Yuan, J., Stenseth, N., Hessen, D., Tian, H., Chen, D., Chen, Y., & Zhang, S. (2023). Greenhouse gas emissions from extractive industries in a globalized era. Journal of Environmental Management, 343, 118172. https://doi.org/10.1016/j.jenvman.2023.1181
Copyright (c) 2026 Wiwit Hartanis, Ika Atma Kurniawanti
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
