Does an Energy Company’s Sensitivity Affect its Performance?: Environmental, Social and Governance Analysis in Coal, Gas, Oil, and Basic Materials Industry Companies

Abstract

This study aims to investigate the relationship between the types of energy companies, namely coal, gas and oil, and their performance levels. In addition, the influence of companies that have high sensitivity to the environment on company performance is also tested. Several important variables were also tested such as social activities, governance, as well as the type of energy company, namely coal, gas and oil. The research was conducted on energy companies and basic material industries listed on the Indonesia Stock Exchange from 2018 to 2021. The method used is multiple regression analysis with a data sample of 154 observations. Four models are used in measuring financial performance, namely ROA, ROE, NPM, and new reduced variables. It was found that environmental activities do not affect performance, including in companies that have high sensitivity. Likewise, social activities and corporate governance proxied by female directors, intensity of board meetings, and board education have no significant effect. On the other hand, liquidity has a positive effect on ROA, DER has a negative effect on ROE and performance reduction results. A unique finding shows that only coal companies have a positive relationship with the performance of companies in the energy sector.