Sustainability Reporting in Shariah Approved Companies: A Comparative Analysis in Malaysia and Indonesia

The purpose of this paper is to extract the sustainability reporting model of shariah approved companies (SAC) and compare its disclosure rate in two developing Islamic countries, Malaysia and Indonesia in order to determine the influence of Islam in sustainability reporting. In this regard, the sustainability reports of the 20 shariah approved companies in Malaysia and Indonesia in 2020 were analyzed with thematic analysis method and using MAXQDA software. In total, 195 basic themes, 28 organizing themes and six economic, environmental, employees, community, customers and sustainability strategy global themes were extracted. The identified basic themes were mostly related to conventional sustainability reporting standards and guidelines. A few basic themes were also related to Islamic responsibility activities, whose scope of disclosure was limited to the employees, customers and community global themes. Quantitative comparison of sustainability reporting in the two countries was performed using statistical analysis. The results showed that the sustainability reporting mean in the level of total disclosure, Islamic responsibility activities and in relation to all dimensions (global themes) in Indonesia is higher than Malaysia. The level of disclosure in the Islamic responsibility activities was also very low compared to total disclosure. In order to compare the significance of the mean difference, mean comparison tests were used. The results showed that there are significant differences in the level of all dimensions, total disclosure and Islamic responsibility activities. Also, the results of Friedman test to rank the level of disclosure showed that the employees dimension had the highest rate of disclosure in the shariah approved companies sustainability reports in the two countries.