Analysis of sustainability reports on the dimensions of good governance using the SAFA-based framework in agricultural companies
DOI:
https://doi.org/10.51599/is.2025.09.02.05Keywords:
sustainability reporting, good governance, SAFA framework, agricultural sector, stock price, mixed methods.Abstract
Purpose. This study aims to assess the implementation of good governance dimensions using the SAFA-based framework (Sustainability Assessment of Food and Agriculture Systems) within the sustainability reports of agricultural companies listed on the Indonesia Stock Exchange (IDX) for the 2023–2024 period. It also examines the impact of disclosing these governance dimensions (corporate ethics, accountability, participation, rule of law, and holistic management) on stock price increases.
Results. This research addresses a knowledge gap in sustainability reporting by examining how governance transparency influences market responses in the agricultural sector. The logistic regression model was not statistically significant overall (p = 0.103), with a Nagelkerke R² of 0.197, indicating modest explanatory power. However, holistic management was found to have a significant positive impact on stock price increases (p = 0.037; Exp(B) = 5.743), suggesting that companies disclosing this dimension were over five times more likely to experience a rise in stock value. The rule of law was marginally significant (p = 0.098), while corporate ethics, accountability, and participation had no statistically significant effect. The classification model correctly predicted 95 % of non-increasing stock values but only 20 % of increasing ones, with an overall accuracy of 70 %. Content analysis further supported these findings, indicating that companies with integrated, detailed disclosures – especially those with holistic governance – tended to receive more favourable market responses.
Scientific novelty. This study is among the first to integrate the SAFA-based framework into governance analysis within sustainability reporting and link it to capital market outcomes in the Indonesian agricultural sector. It combines quantitative modelling and narrative-based qualitative insights to understand how governance transparency affects market perception, offering a comprehensive and original perspective on sustainable corporate governance practices.
Practical value. Findings from this research offer actionable insights for corporate decision-makers, sustainability professionals, and investors. Emphasising that not all governance disclosures carry equal weight, the study encourages agricultural companies to adopt and communicate authentic, holistic governance strategies. These findings also support policymakers in developing frameworks that enhance market responsiveness to sustainability performance in emerging economies.
References
Alaoui, A., Barão, L., Ferreira, C. S. S., & Hessel, R. (2022). An overview of sustainability assessment frameworks in agriculture. Land, 11(4), 537. https://doi.org/10.3390/land11040537
Alsahlawi, A. M., Chebbi, K., & Ammer, M. A. (2021). The impact of environmental sustainability disclosure on stock return of Saudi listed firms: the moderating role of financial constraints. International Journal of Financial Studies, 9(1), 1–17. https://doi.org/10.3390/ijfs9010004
Cammarata, M., Timpanaro, G., & Scuderi, A. (2021). Assessing sustainability of organic livestock farming in Sicily: a case study using the Fao Safa framework. Agriculture, 11(3), 274. https://doi.org/10.3390/agriculture11030274
da Silva, P. P. (2025). Non-financial disclosure and stock price informativeness: the role of country-level institutional factors. Financial Markets and Portfolio Management, 39, 225–258. https://doi.org/10.1007/s11408-025-00466-9
de Souza Barbosa, A., da Silva, M. C. B. C., da Silva, L. B., Morioka, S. N., & de Souza, V. F. (2023). Integration of environmental, social, and governance (ESG) criteria: their impacts on corporate sustainability performance. Humanities and Social Sciences Communications, 10, 410. https://doi.org/10.1057/s41599-023-01919-0
Escobar-Saldívar, L. J., Villarreal-Samaniego, D., & Santillán-Salgado, R. J. (2025). The effects of ESG scores and ESG momentum on stock returns and volatility: evidence from U.S. markets. Journal of Risk and Financial Management, 18(7), 367. https://doi.org/10.3390/jrfm18070367
FAO (2014a). Building a common vision for sustainable food and agriculture principles and approaches. Available at: https://openknowledge.fao.org/server/api/core/bitstreams/cd7ebb4f-da7c-474d-83df-b5cc224d2ff8/content
FAO (2014b). Safa sustainability assessment of food and agriculture systems guidelines. Available at: https://openknowledge.fao.org/server/api/core/bitstreams/72070c29-47d6-47ef-8059-e78168c2fb69/content
Ferri, S., Tron, A., Colantoni, F., & Savio, R. (2023). Sustainability disclosure and IPO performance: exploring the impact of ESG reporting. Sustainability, 15(6), 5144. https://doi.org/10.3390/su15065144
Gayatri, S., Gasso-tortajada, V., & Vaarst, M. (2016). Assessing sustainability of smallholder beef cattle farming in Indonesia: a case study using the FAO SAFA framework. Journal of Sustainable Development, 9(3), 236. https://doi.org/10.5539/jsd.v9n3p236
Kotsantonis, S., & Serafeim, G. (2019). Four things no one will tell you about ESG data. Journal of Applied Corporate Finance, 31(2), 50–58. Available at: https://ssrn.com/abstract=3420297
Maak, T. (2007). Responsible leadership, stakeholder engagement, and the emergence of social capital. Journal of Business Ethics, 74(4), 329–343. https://doi.org/10.1007/s10551-007-9510-5
Nawawi, A. H. T., Agustia, D., Lusnadi, G. M., & Fauzi, H. (2020). Disclosure of sustainability report mediating good corporate governance mechanism on stock performance. Journal of Security and Sustainability Issues, 9, 151–170. https://doi.org/10.9770/jssi.2020.9.J(12)
OECD (2021). ESG Investing: practices, progress and challenges. OECD Publishing, Paris. https://doi.org/10.1787/b4f71091-en
Romadhona, S., Puryono, S., Mussadun, & Rachmawati, S. (2024). Holistic sustainability assessment of certified organic, non-certified organic, and non-organic rice farming practices using SAFA framework in Sleman Regency, Indonesia. AGRARIS: Journal of Agribusiness and Rural Development Research, 10(2), 256–278. https://doi.org/10.18196/agraris.v10i2.415
Schoonenboom, J. (2023). The fundamental difference between qualitative and quantitative data in mixed methods research. Forum Qualitative Sozialforschung Forum: Qualitative Social Research, 24(1), 11. https://doi.org/10.17169/fqs-24.1.3986
Soldi, A., Meza, M. J. A., Guareschi, M., Donati, M., & Ortiz, A. I. (2019). Sustainability assessment of agricultural systems in Paraguay: a comparative study using FAO’s SAFA framework. Sustainability, 11(13), 3745. https://doi.org/10.3390/su11133745
Suarsa, A., Sugiartiningsih, S., Kusumawati, E., Fitriani, I. D., Pratiwi, N., & Fadilah, Y. (2024). Sustainability practices in Indonesian cattle farming: insights from the SAFA Framework. Organic Farming, 10(2), 120–132. https://doi.org/10.56578/of100203
Sulimany, H. G. H., Ramakrishnan, S., Chaudhry, A. A., & Bazhair, A. H. (2021). Impact of corporate governance and financial sustainability on shareholder value. Estudios de Economia Aplicada, 39(4). https://doi.org/10.25115/eea.v39i4.4318
Suttipun, M., Lakkanawanit, P., Saramolee, A., Yaacob, Z., & Srijunpetch, S. (2025). Environmental, social, and governance disclosures and market reaction of Thai-listed companies in the alternative capital market. Journal of Risk and Financial Management, 18(3), 113. https://doi.org/10.3390/jrfm18030113
Tjahjadi, B., Soewarno, N., & Mustikaningtiyas, F. (2021). Good corporate governance and corporate sustainability performance in Indonesia: a triple bottom line approach. Heliyon, 7(3), e06453. https://doi.org/10.1016/j.heliyon.2021.e06453
United Nations (n.d.). What is the Rule of Law. Available at: https://www.un.org/ruleoflaw/what-is-the-rule-of-law
Utama, A. A. G. S., & M. R. R. (2016). The influence of sustainability report disclosure as moderating variable towards the impact of intellectual capital on company’s performance. International Journal of Economics and Financial Issues, 6(3), 1262–1269. Available at: https://www.econjournals.com/index.php/ijefi/article/view/2314
