Sustainability reporting has acquired considerable prominence as firms increasingly acknowledge the necessity of incorporating environmental, social, and governance (ESG) considerations into their business plans. This transition is primarily influenced by increased stakeholder expectations, regulatory demands, and the rising acknowledgment that sustainable practices may augment long-term wealth development. Sustainability reporting is an essential mechanism for businesses to convey their sustainability performance and strategies to stakeholders, promoting openness and accountability (Rezaee et al., 2023).

In this context, environmental management accounting (EMA) serves as a crucial element that facilitates the connection between sustainability reporting and value development. EMA equips firms with essential frameworks and tools to assess, evaluate, and report environmental costs and performance, facilitating informed decision-making that fits with sustainability objectives (AlShara, 2022) (Sekerez, 2017). The incorporation of EMA into sustainability reporting practices improves the quality and credibility of reports while enabling the identification of opportunities for resource efficiency and cost savings, thereby enhancing organizational performance (Ardiana, 2021) (Auliani et al., 2023).

Furthermore, the alignment of sustainability reporting with the Sustainable Development Goals (SDGs) has emphasized the importance of Environmental Management Accounting (EMA) in facilitating value generation. Organizations that implement SDG reporting frameworks are more inclined to undertake comprehensive sustainability practices and pursue external verification of their reports, hence augmenting stakeholder trust and bolstering their reputational capital (Rezaee et al., 2023); (Rosati & Faria, 2019)). As companies manage the intricacies of sustainability reporting, the pivotal role of EMA is crucial in guaranteeing that the disclosed information is both precise and indicative of the organization's dedication to sustainable development (Asiaei et al., 2021).

Despite the expanding research on sustainability reporting and its influence on company value, notable gaps still about the precise function of EMA as a mediating component in this connection. Although research has demonstrated a favorable association between sustainability reporting and business value, the processes by which Environmental Management Accounting (EMA) affects this relationship remain poorly understood. Current studies, such those by (Brozović et al., 2020), highlight the significance of value co-creation in sustainability initiatives but fail to sufficiently explore how Environmental Management Accounting (EMA) might support this process.

The contextual elements that may affect the efficacy of EMA in moderating the link between sustainability reporting and business value remain insufficiently examined. (Lacoste, 2016) examines the sustainable value co-creation process but neglects to address how varying sector features or regulatory frameworks could influence the function of EMA. This offers a chance for additional study to examine how contextual elements influence the efficacy of EMA in augmenting the value obtained from sustainability reporting.

Moreover, although the incorporation of EMA into sustainability reporting methods is acknowledged as advantageous, empirical data assessing its effect on business value is limited. Research conducted by (Harymawan et al., 2020) emphasize the significance of external assurance in sustainability reporting, although they do not explicitly investigate the mediating function of EMA. This gap signifies a necessity for empirical research that assesses the direct and indirect impacts of EMA on financial performance results within the framework of sustainability reporting.

The influence of stakeholder involvement on the interplay between sustainability reporting, environmental management accounting, and business value is mostly unexamined. Investigation conducted by (Xu et al., 2023) examines the ramifications of sustainability reporting but fails to explore the impact of stakeholder expectations on the efficacy of EMA as a mediating variable. Comprehending these relationships may yield significant insights into how companies may more effectively connect their sustainability reporting processes with stakeholder interests to augment company value.

The theoretical framework of the research is shown in figure 1. The interactions among corporate social responsibility (CSR), environmental management accounting (EMA), and firm value can be analyzed through stakeholder theory, which asserts that firms should account for the interests of all stakeholders, rather than solely those of shareholders, in their decision-making processes. Deegan (2004) argues that stakeholder theory highlights organizational accountability that extends much beyond just financial or economic success. This idea asserts that firms would willingly reveal information on their environmental, social, and intellectual performance beyond required criteria to fulfill the real or perceived expectations of stakeholders.

The whole population examined in this research comprises companies listed on the Indonesian Stock Exchange (ISE). This study's sample is confined to manufacturing enterprises listed on the Indonesian Stock Exchange (ISE) for the years 2020 and 2023 only. This research is based on secondary data obtained from www.idx.co.id. A purposive sampling method is employed under the specified conditions: (i) A comprehensive list of all manufacturing firms listed on the Indonesia Stock Exchange (IDX) from 2020 to 2023; (ii) A detailed account of all companies that did not provide complete data necessary for this study; and (iii) A summary of all companies lacking any information related to sustainability reports or annual reports during the research period. The outcomes of the sample selection are presented in TABLE 1.

The initial three hypotheses are examined by two distinct multiple regression models in multiple regression analyses. To start the testing of hypothesis 1, we construct a multiple regression model using EMA as the dependent variable and CSR as the independent variables. In the second multiple regression model employed to evaluate hypotheses 2 and 3, the dependent variable is firm value (FV), while the independent variables are CSR and EMA. Defond (2016) presents the subsequent regression models:

EMAi, t = α0 + α1CSRi, t + α2GICi, t + ε………………………….(1)

FVi,t = α0 + α1 CSRi,t + α2GICi,t + α3EMAi,t + ε…………….........(2)

Path analysis was employed to evaluate hypothesis 4. Baron and Kenny (1986) were the pioneers in introducing path analysis as a method for examining interdependencies among independent, dependent, and mediating variables. This research use path analysis using a structural equation model to elucidate the influence of sustainability report disclosure variable on firm value. We ascertain the connection between the two variables and next decompose it into its constituent components—the direct pathways and the indirect paths through mediating factors (Defond, 2016). Baron and Kenny (1986) propose that the dependent variable can follow two potential pathways—direct and indirect effects—within three-variable systems. Baron and Kenny (1986) stipulate that a variable must comply with three criteria to be designated as a mediator:

The influence of the independent variable on the dependent variable in the regression equation will diminish if all three criteria of the findings are met. Utilizing the subsequent formula in the Sobel test, one may ascertain if the mediation effect is statistically significant:

In this context, "a" represents the beta coefficient of the "a" path, whereas "b" signifies the beta coefficient of the "b" path. The standard deviation for path an is represented by Sa, whereas the standard deviation for path b is marked as Sb. Under the assumption of an abnormal sample distribution at α = 0.05, the critical value for the z-test is ±1.96 (Carolina et al., 2004). This study employed a research test comprising three variables: firm value, environmental management accounting as a mediating variable, and sustainability report disclosure as an independent variable. The path analysis chart of this study may be described according to the prior explanation and in accordance with the theoretical frameworks proposed by Baron & Kenny (1986) and Defond (2016).

Utilizing EMA as the mediating variable, we examined hypotheses concerning the link among CSR, GIC, and corporate value. Two regression models were employed to evaluate the hypotheses. The results of the hypothesis testing for the research model are presented in TABLE 3.

Path analysis and the Sobel test were used to investigate the indirect influence of CSR on company value via the proposed mediator variable, EMA. Baron and Kenny (1986) stipulate that a variable qualifies as a mediator if it satisfies three initial requirements. TABLE 4.9 presents a summary of the path analysis results and the Sobel test inside the study model. TABLE 4.9 illustrates the path analysis on the direct and indirect impacts of CSR on firm value. The findings demonstrate that both the direct path (c) and the path via the proposed mediator factors (a and b) exhibit significant values. Consequently, EMA has effectively satisfied the three primary requirements as a mediating variable. A Sobel test was performed to ascertain the significance level of the EMA variable as a mediator by evaluating the Z value of the mediator. The resultant z value is 2.039, above 1.96. The findings supports hypothesis four (H4), indicating that EMA mediates the association between CSR and firm value.

The outcomes of hypothesis testing, path analysis, and the Sobel test, as previously detailed, are summarized below in TABLE 5.

Initially, we evaluate the hypothesis asserting a positive link between Corporate Social Responsibility (CSR) and Environmental Management Accounting (EMA) (H1). At the 5% significance level, the alternative hypothesis (H1) is supported. The findings of experiment H1 indicate that CSR has a statistically significant positive impact on EMA (β = 0,675); sig. = 0.002). This research supports the findings of (Jang et al., 2019) and (Mardiati et al., 2022). The research indicates a favorable correlation between corporate social responsibility and environmental management accounting. CSR activities enhance the acceptance and efficacy of EMA through increased responsibility, the incorporation of environmental factors, stakeholder influence, and higher-level decision-making. As firms increasingly acknowledge the significance of incorporating CSR and EMA into their business strategy, the beneficial effects on environmental performance and sustainability are expected to become more evident.

The second hypothesis (H2) was validated by a statistical test with a 5% significance level (β = 0,567; p = 0,003). In line with (Harun et al., 2020) (Hermawan et al., 2023) (Kim et al., 2018) (Ooi et al., 2021), effective CSR procedures cultivate robust connections with stakeholders, encompassing consumers, workers, and investors. (Harun et al., 2020) assert that CSR disclosure can strengthen stakeholder trust, which is crucial for sustained corporate success. When companies exhibit a dedication to social responsibility, they are more inclined to attract and keep loyal consumers and motivated staff, both of which enhance organizational performance and value. This stakeholder involvement fosters a virtuous cycle in which excellent CSR activities enhance trust and, in turn, elevate financial success.

The 5% significance level (β=0,219; p=0,000) provided statistical evidence for the third hypothesis (H3). This findings in line with the research’s results by ((Javed et al., 2022); (Mulyadi & Maulana, 2022)). The EMA is essential for assisting companies in adhering to environmental requirements and managing related risks. (Javed et al., 2022) assert that firms implementing EMA techniques are more adept at managing regulatory obligations and reducing ecological risks. By carefully controlling environmental consequences, companies may circumvent potential penalties and legal responsibilities, therefore safeguarding their financial success. The risk management component of EMA is crucial for preserving and augmenting corporate value, especially in sectors governed by rigorous environmental rules.

Furthermore, this study aims to demonstrate the mediating influence of EMA, yielding a Sobel test result that substantiates the fourth hypothesis. This research aligns with ((Mulyadi & Maulana, 2022); N(Novitasari et al., 2022); (Wicaksono & Tarisa, 2022)). (Novitasari et al., 2022) discovered that corporate social responsibility (CSR) significantly enhances business performance, suggesting that companies participating in CSR initiatives are prone to achieve superior financial results. Additionally, Kong et al. Kong et al. (2019) illustrate that corporate social responsibility (CSR) is positively correlated with the adoption of environmental management techniques, hence validating the idea that CSR activities facilitate the application of environmental management accounting (EMA), which subsequently increases company value.

This study establishes that Environmental Management Accounting (EMA) significantly mediates the association between sustainability report disclosure and corporate value. Regression analysis and the Sobel test revealed that EMA may augment corporate value by improving operational efficiency, transparency, and stakeholder confidence. The results demonstrate that organizations who actively include EMA into their sustainability reporting have superior financial success. This finding underscores that the integration of Corporate Social Responsibility (CSR) and Environmental Management Accounting (EMA) not only fosters environmental sustainability but also enhances the company's long-term economic worth. Consequently, it is essential for firms to perpetually enhance EMA practices as a fundamental component of their sustainability strategy to provide increased value for all stakeholders.