Effect ESG on Financial Performance

Abstract

Studies related to this research topic still have inconsistent results. The research objective was to examine and determine the effect of corporate social responsibility, environmental performance and sustainability report disclosure on financial performance. Manufacturing companies have a sizable contribution to environmental pollution, so the researchers decided that manufacturing companies on the Indonesia Stock Exchange for the 2018-2021 period were the population. This research uses quantitative methods and uses secondary data. Purposive sampling was used as a sampling technique in this study. Companies that fulfill the sample are 10 for 4 years (40). Partial least square is used as a data analysis technique. The results of the study show that corporate social responsibility has a significant positive effect on financial performance, while environmental performance and sustainability reports have an insignificant positive effect.

The Effects of Environmental, Social and Governance (Esg) Disclosures on Financial Performance: A Theoritical Approach

“…Companies need to be aware of their stakeholders' demands regarding environmental performance in order to avoid having their financial performance and sustainability negatively impacted. Moreover, the same thing is disclosed by (Rizqi, et. al, 2023) Because it shows that the business has met its obligations and can prevent environmental damage issues that could result in higher costs or even the company's closure of its business operations, good environmental performance can be evidence that the business can grow sustainably and over the long term.…”