This study aims to investigate the relationship between carbon emission disclosure and earnings management within Indonesian firms. Two competing theories are often used to predict this relationship, including ethical behaviour and opportunism motivation views. Panel data in Indonesian listed firms between 2016 and 2021 are employed in this study. Panel regression is utilised to analyse the firm data for fixed effects and robust standard errors. Firms disclosing carbon emission-related information exhibit less absolute discretionary accruals. This finding implies that these firms are less likely to engage in unethical financial reporting practices, such as earnings management. We also note that the number of firms disclosing carbon emission-related information in sustainability reports increases, as sustainability reporting has been mandated since 2019 in Indonesia. This conclusion is also confirmed through the robustness check and endogeneity tests. The findings of this study can be used when formulating policy initiatives and regulations to promote carbon emission disclosure practices within Indonesian firms. To the best of our knowledge, this study is the first study to examine the effect of carbon emission disclosure in sustainability reports on earnings management in the midst of the sustainability reporting requirement period. It provides empirical evidence that carbon emission disclosure is viewed as an ethical practice.